Since petroleum resources are believed to last only for a few decades, alternative sources ofrnbiofuel production should be exploited. In order to replace all the fossil fuels consumed in thernworld, other sources of biodiesel which have higher productivity per unit area of land thanrnvegetable and non edible oilseed feed stocks are required. One of the alternative sources whichrnfalls in to relatively higher productivity per unit area of land (10g/m2/day -50g/m2/day) is thernproduction of biodiesel from microalgae.rnThis study focuses on production of biodiesel from microalgae by transesterification reaction.rnAlgal biomass of symbiotic blue green algae were collected from ARARI. After drying thernbiomass, algae oil was extracted by soxhlet extraction method using solvent, hexane. Then,rnpurification of the oil was performed by degumming, neutralization, and bleaching to facilitaternthe characterization and biodiesel production process. The characterization test of the oilrnconfirmed that oil can be produced from the algal biomass with the acceptable range of pyiscochemicalrnproperties for biodiesel production. Then, biodiesel was produced by base catalyzedrntransesterification reaction and characterized by determining density, kinematic viscosity, acid value,rnsaponification number, flash point and heating value. HPLC analysis was conducted to determine thernconversion of oil to biodiesel. The characteristic test result of the biodiesel showed that the density,rnkinematic viscosity, acid value, saponification number, flash point and heating value conforms to all thernstandard specifications of ASTM D 6751 and EN 14214, except for its acid value (0.57mgKOH/g)rnwhich is 14 % above the EN 14214 specification.rnThe result showed that the symbiotic blue green algae in ARARI can be used to producernbiodiesel with acceptable quality. However, the oil yield of the algal biomass was very lowrn(5.4wt %) when compared with oil contents of algal strains (>15wt %) recommended forrnbiodiesel production. Therefore, three different pure algal strains were selected and assessedrnbased on their oil content and productivity with growth parameter requirements of climaticrnconditions which conform to the Ethiopian environment particularly to the specific area selectedrnfor cultivation. The results of the investigation showed that the strain Bortyococcus braunii givesrnthe best result and recommended for cultivation of algal biomass for biodiesel production inrnEthiopia.