In an effort to process wet algal biomass directly, eliminate organic solvent use during lipid extraction, and recover nutrients (e.g., N, P, and glycerol) for reuse, we developed a catalyst-free, two-step technique for algal biodiesel production. In the first step, wet algal biomass (ca. 80% moisture) reacts in subcritical water to hydrolyze intracellular lipids, conglomerate cells into an easily filterable solid that retains the lipids, and produce a sterile, nutrient-rich aqueous phase. In the second step, the wet fatty acid-rich solids undergo supercritical in situ transesterification (SC-IST/E) with ethanol to produce biodiesel in the form of fatty acid ethyl esters (FAEEs). Chlorella vulgaris grown sequentially under photo- and heterotrophic conditions served as the lipid-rich feedstock (53.3% lipids as FAEE). The feedstock and process solids were characterized for lipid components using highly automated microscale extraction and derivatization procedures and high-temperature gas chromatography. Hydrolysis was examined at 250 degrees C for 15 to 60 min; solids recovered by filtering contained 77-90% of the lipid originally present in the algal biomass, mainly in the form of fatty acids. The effects of reaction time (60 or 120 min), temperature (275 or 325 degrees C), and ethanol loading (approximately 2-8 w/w EtOH/solids) were examined on the yield and composition of biodiesel produced from the SC-IST/E of the hydrolysis solids. Longer time, higher temperature, and greater ethanol loading tended to increase crude biodiesel and FAEE yields, which ranged from about 56-100% and 34-66%, respectively, on the basis of lipid in the hydrolysis solids. Isomerization and decomposition of unsaturated FAEEs was quantified, and its effect on fuel yield is discussed.