With the rapid growth of biodiesel industry the production of crude glycerol as one of major biodiesel by products has been dramatically increased. Fully utilizing such a large quantity of crude glycerol is critical to the sustainability of biodiesel industry. Lactic acid is an important industrial chemical that is widely used as a food additive for flavoring and preservative, a moistener in cosmetic industry, and recently used as a raw material for poly-lactic acid (a biodegradable plastic) production. Some fungal strains can effectively utilize crude glycerin as its sole carbon source, and unlike its competitors of lactice acid producing bacteria, tolerate high impurities and require less nutrient supplemems to grow and produce optical pure L-lactic acid. Due to the limitations of high raw material costs and nutrient requirement the bacterial lactic acid processes are currently encountering, fungal culture on a cheap feedstock of crude glycerol, along with fewer requirements of other nutrients and high tolerance on impurities in crude glycerol, could be a better solution for both biodiesel and lactic acid industries. In addition, fungal pelletization technology will overcome an inherent disadvantage in that fungal strains form cotton-like biomass, which will significantly improve mass transfer and biomass handling and further enhance lactic acid yield and productivity. The goal of the project is to use the pelletized fungal fermentation on crude glycerol from biodiesel production as nutrient source to produce an optically pure L-(+) lactic acid. The specific objectives are: 1) testing and optimizing lactic acid production using crude glycerol as carbon source; 2) maximizing lactic acid production using different culture methods, and 3) testing the economic feasibility of the process. The success of this project will turn an environmental liability of biodiesel waste into a public and private asset, which would lead to biodiesel production more economical and sustainable