Recently, there has been an increasing demand of oil in fields like food industry, pharmaceutical industries etc. The oil derived from plants and animal requires geographical and climatic conditions, land use, ethical issues, environmental problems and takes longer generation cycle. Hence researchers all over the world have been working on an alternative approach to produce oil, to replace unsustainable fossil fuels with biofuels like biodiesel and alternatives to edible oils and additives. It has been observed that the lipid profile produced by microbes, especially that by oleaginous yeast is similar in type and composition to the oils and fats produced by most plants and animals therefore have many advantages like competitiveness with food, have short growth cycle and their cultivation is independent of climatic factors and can also be genetically modified. Oils extracted from microorganisms is also known as single cell oils (SCO) and yeast, mainly oleaginous yeast have been found with the ability to store lipids over 20% and up to 70% of their cell dry weight and can accumulate lipids up to 40% of their biomass. Hence yeast can be exploited to a great extend using cheap substrates as starting material for the production of oil by fermentation. In this review article, our main focus is on evaluation of oleaginous yeast and understanding their lipid biochemistry, production and also inspecting their potential in industrial applications.