Microbial biosynthesis has provided an interesting way to the sustainable production of biofuels. Many efforts have been done to develop efficient microbial platforms to biofuel production in terms of titer and productivity. The oleaginous yeast Yarrowia lipolytica can grow on hydrophobic wastes and accumulate high quantities of lipids as biocrude and fuel feedstock. On the one hand, Y. lipolytica consumes low-cost hydrophobic substrates and reduce their environmental pollution; on the other hand, it produces biotechnologically valuable products such as different lipases and fatty biocrudes which they use in biofuel production. Hence, Y. lipolytica is a promising candidate for sustainable production of fatty acid-based biofuels. Furthermore, new techniques of metabolic engineering and synthetic biology have been used to create Y. lipolytica strains with significantly improved capabilities for biofuel production. The potentials of Y. lipolytica in biofuel production will be reviewed from application of its enzymes in biodiesel manufacture to accumulation of lipids for fatty acid-based advanced biofuels synthesis as well as recent developments in metabolic engineering to make stable and robust strains.