Increasing demand for energy along with the limitations of fossil fuel sources and their negative impacts on the environment, have made the effort for finding a suitable replacement for energy a high priority. Microalgae as feedstock for bio-fuels has several benefits, including their fast growth, their ability to grow on land and water sources not suitable for crops, their high lipid content, and their potential to serve as sink for CO₂. As a result, they have been proposed as feedstock for biodiesel production through lipid extraction. The residual waste after the lipid extraction is called lipid extracted algae (LEA). This research investigated the feasibility of using LEA as feedstock for the production of methane through anaerobic digestion. The research involved four tasks, namely cultivation and harvesting, lipid extraction, LEA purification, and anaerobic digestion. Chlorella Vulgaris (C. vulgaris), one of the most researched algal species, was grown in the lab. Lipid extraction performed on the C. vulgaris biomass at 10% solids resulted in about 200 mg lipid per gram of dry mass of algae which is equivalent to 7.66 kJ/gram of C. vulgaris. A number of methods were investigated for the purification of LEA, including evaporation with water bath, distillation by Rotovap, and evaporation by heating at 90, 95 and 100°C. The results showed that a two-step method, distillation by Rotovap followed by heating at 100°C was the best method for the purification of LEA. Bench-scale anaerobic digesters were set up and a number of processes and operational parameters were examined to establish the optimum condition for the digestion of LEA. The results revealed that an LEA to inoculum ratio of 1 to 1 on the basis of volatile solids, alkalinity of 3000 mg/L as CaCO₃, digestion time of 20-day, and pH of ~7.0 produced the highest CH₄ yield under mesophilic condition. On average, the CH₄ yield per mass of LEA was determined as 108.8 mL/gram or 87 mL per gram of C. vulgaris at 25°C and 1 atm, which is equivalent to 3.16 kJ/gram of C. vulgaris processed. This resulted in ~40% increase in energy recovery from C. vulgaris.