The invention is directed to a genetically modified microorganism for the extracellular production of free fatty acids and esters thereof, wherein said microorganism is characterized by a modified lipid biosynthesis metabolic pathway: for example reduced fatty acyl-coA synthetase activity that enables the microorganism to overproduce and secrete of esters of fatty acids (Biodiesel) into the surrounding medium, using one or more of: glucose, starch, lignocellulose and a glycerol-based substrate, as a carbon source. The invention further provides a method for the extracellular production of free fatty acids and esters thereof, comprising the use of said genetically modified organism, and a growth medium adapted for said method.