A method of producing a biodiesel from a wet biomass is provided. The method includes providing the wet biomass that includes water and biomass solids. The method also includes heating the wet biomass at a first temperature and a first pressure for a time period ranging from 10 to 480 minutes to form an aqueous solution and a solid agglomerate containing a hydrolyzed lipid component. The method also includes step of transesterifying the hydrolyzed lipid component to form biodiesel.