Yarrowia lipolytica is an oleaginous, nonconventional yeast with impressive lipid biosynthesis, extremophilic characteristics and the ability to consume a wide range of substrates. These characteristics make Y. lipolytica an effective microbial platform for waste-to-value biotransformation of waste biomass and food waste-derived volatile fatty acids (VFAs). Ionic liquid (IL) carryover from lignocellulosic biomass pretreatment inhibits microbial biotransformation of waste biomass into valuable fuels and chemicals during simultaneous saccharification and fermentation. To overcome this challenge, we used evolutionary engineering to develop an IL tolerant strain of Y. lipolytica that can grow at a competitive growth rate in the presence of ≤14% IL (v/v). We also investigated the potential of Y. lipolytica as an oleaginous cell platform for bioconversion of food waste-derived VFAs, produced during anerobic digestion, into biolipids for biodiesel. We found that Y. lipolytica can utilize sole VFAs as a cost-effective substrate producing lipid contents up to 25% of cell biomass.