NOVELTY - Genetically modified microorganism (M') for extracellular production of free fatty acids and its esters, comprising: reduced fatty acyl-coenzyme(coA) synthetase activity conferred by FAA2 gene (long chain fatty acyl-CoA synthetase gene) deletion; and enhanced acetyl CoA carboxylase expression conferred by recombinant endogenous acetyl CoA carboxylase (ACC1) gene operably linked to heterologous promoter, and/or transgene encoding pyruvate formate lyase (PflA and PflB), where microorganism is selected from e.g. Aspergillus, Candida, Cryptococcus; is new.    USE - As genetically modified microorganism for extracellular production of free fatty acids and its esters (claimed), such as for biodiesel production.    ADVANTAGE - The genetically modified microorganism (M') selected from yeast or fungal strain provides alternative source of biodiesel, by providing extracellular production of free fatty acids (such as medium chain fatty acid (MCFAs)) and its esters, by modifying the lipid biosynthesis metabolic pathway by genetic engineering, where the microorganism has metabolic pathway for lipid biosynthesis specifically engineered to overproduce and extracellularly secrete esterified fatty acids in the medium when supplied with substrates such as glucose, starch, glycerol and lignocellulose that are cheap carbon sources; and is a robust, and high-yielding microorganism. The use of non-starch carbon sources such as cellulose, hemicelluloses, xylose, and lignin not only favors economics of bulk production of biodiesel, but also reduces strain on agricultural resources needed to satisfy society's need for food. The genetically modified microorganism is capable of producing large cell biomass combined with and high extracellular lipid yield. The genetically modified yeast or fungal strain has reduced fatty acid catabolism. Deletion of FAA2 gene that is responsible for activation of MCFAs for beta oxidation, in yeast or fungal species, reduces metabolic flux through fatty acid catabolism. In addition a FAA2 Delta yeast or fungal species results in synthesis of a higher proportion of MCFAs than wild type yeast, and is further capable of extracellular secretion of MCFAs synthesized within cell. The genetically modified yeast or fungal species/strain is further modified to have increased fatty acid anabolism by increasing the production of cytosolic acetyl CoA, where the yeast or fungal strain is genetically modified by transformation with and expression of gene encoding pfl, which is enzyme that converts pyruvic acid to acetyl-CoA and formic acid in cytosol. Since the availability of acetyl-CoA may function as one of the important constraints in biosynthesis process of not only fatty alcohols but lipids in general, this genetic modification serves to boost production of fatty acids by fermentation using microorganism. Since this enzyme is localized in cytosol, it can be used to increase concentration of acetyl CoA in cytosol and more acetyl CoA is available for conversion into malonyl CoA. Thus genetically modified yeast strain has increased production of malonyl CoA. The acetyl-CoA functions as a metabolic junction, interconnecting several metabolic pathways, both anabolic and catabolic. The ACC catalyses reaction in which acetyl CoA is carboxylated to form 3-carbon compound malonyl CoA, which is then enters metabolic pathway of lipid biosynthesis. The rise in cytosolic concentration of malonyl CoA in fermenting yeast will result in higher flux through lipid-biosynthesis and higher production of fatty acids. The genetic modifications thus maximize number of carbon moles ingested by fermenting organism that are forced to enter lipid biosynthesis pathway.    DETAILED DESCRIPTION - A genetically modified microorganism (M') for extracellular production of free fatty acids and its esters, comprising: reduced fatty acyl-coenzyme(coA) synthetase activity conferred by a FAA2 gene (gene encoding long chain fatty acyl-CoA synthetase) deletion; and enhanced acetyl CoA carboxylase expression conferred by a recombinant endogenous acetyl CoA carboxylase (ACC1) gene, where the gene is operably linked to a heterologous promoter, and/or a transgene encoding a pyruvate formate lyase (PflA and PflB), where the microorganism is selected from Aspergillus, Candida, Cryptococcus, Debaryomyces, Fusarium, Lindnera, Lipomyces, Monascus, Mucor, Pachysolen, Pichia, Rhizopus, Rhodosporidium, Rhodotorula, Saccharomyces, Schizosacchromyces, Trichosporon, Yarrowia, and Zygosacchromyces, is new. INDEPENDENT CLAIMS are included for the following:    (1) a growth medium (M'1) comprising (per liter of medium): carbon source ( greater than or equal to 50 g) selected from at least one of glucose, glycerol, xylose, hydrolyzed cellulose and hemicellulose, starch, sugar alcohol and xylan; nitrogen source including ammonium sulfate (5 g); vitamins including biotin (20 mu g), folic acid (2 mu g), inositiol (10 mg), niacin (400 mu g), riboflavin (200 mu g), pyridoxine hydrochloride (400 mu g), and thiamine hydrochloride (400 mu g); compounds supplying trace elements including boric acid (500 mu g), copper sulfate (40 mu g), potassium iodide (100 mu g), ferric chloride (200 mu g), manganese sulfate (400 mu g), sodium molybdate (200 mu g), and zinc sulfate (400 mu g); and salts including potassium phosphate monobasic (900 mg), potassium phosphate dibasic (200 mg), magnesium sulfate (500 mg), sodium chloride (100 mg), and calcium chloride (100 mg); and    (2) method (M1a) for the extracellular production of free fatty acids and its esters, involving: (a) introducing a yeast or fungal strain into a growth medium to produce a culture; (b) incubating the culture, where the growth medium in the culture is aerated with oxygen; (c) further incubating the culture after step (b) in the absence of an oxygen supply; and (d) recovering an extracellular phase comprising free fatty acids and esters from the culture; where the microorganism is a yeast or fungal strain.