Microalgae are an attractive source for biofuels due to their high growth rates and lipid content. However, up to the present time, the extraction of lipids from wet microalgae biomass remains an energy-intensive step, and an impediment for the economically viable large scale bio-oil production. During the extraction process, cell disruption and drying are two of the most energy-consuming steps. Several studies on genetic modification of microalgae towards lipid accumulation enhancement, or to reduce the harvesting and lipid extraction cost have been carried out successfully. This chapter aims to summarize the recent developments in microalgal oil extraction processes, including drying methods, cell disruption methods, conventional or supercritical solvent extraction methods, and recent approaches for direct biodiesel production. The current developments in metabolic engineering for lipids production are also reviewed. Hydrothermal liquefaction is also included as an alternative route to convert wet biomass into bio-crude oil.