In the quest for inexpensive feedstocks for the cost-effective production of liquid fuels, we have examined gaseous substrates that could be made available at low cost and sufficiently large scale for industrial fuel production. In this work, we introduce a new bioconversion scheme that effectively converts syngas, generated from gasification of coal, natural gas, or biomass, into lipids that can be used for biodiesel production. We present an integrated conversion method comprising a two-stage system. In the first stage, an anaerobic bioreactor converts mixtures of gases of CO<
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and CO or H<
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to acetic acid, using the anaerobic acetogen <
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Moorella thermoacetica<
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. The acetic acid product is fed as a substrate to a second bioreactor, where it is converted aerobically into lipids by an engineered oleaginous yeast, <
em>
Yarrowia lipolytica<
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. We first describe the process carried out in each reactor and then present an integrated system that produces microbial oil, using synthesis gas as input. The integrated continuous bench-scale reactor system produced 18 g/L of C16-C18 triacylglycerides directly from synthesis gas, with an overall productivity of 0.19 g?L<
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-1<
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?h<
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-1<
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and a lipid content of 36%. Although suboptimal relative to the performance of the individual reactor components, the presented integrated system demonstrates the feasibility of substantial net fixation of carbon dioxide and conversion of gaseous feedstocks to lipids for biodiesel production. The system can be further optimized to approach the performance of its individual units so that it can be used for the economical conversion of waste gases from steel mills to valuable liquid fuels for transportation.