This study examined the valorization of dairy wastewater in the production of lipids by Rhodococcus opacus for biodiesel application. Using synthetic media based on dextrose and ammonium nitrate as the carbon and nitrogen source, respectively, the bacterium accumulated 71% (w/w) of lipids. Using only the raw dairy wastewater, the bacterium accumulated 14.28% w/w lipid and reduced the initial wastewater chemical oxygen demand (COD) by 30%. These values were, however, enhanced to 30–33% w/w and 62%, respectively, by supplementing the dairy wastewater with mineral salt media in the ratio 1:3. Bioreactor experiments were further performed using raw dairy wastewater and mineral salt medium in 1:3 ratio under both uncontrolled and controlled temperature and pH conditions. Interestingly biomass growth, lipid accumulation in the bioreactor experiments were found to be lower as compared to those in the shake flask experiments, whereas the wastewater COD removal was much higher in the bioreactor study. 1H nuclear magnetic resonance (NMR) spectroscopy of the fatty acids accumulated by the bacteria using dairy wastewater based media revealed that it contained more saturated fatty acids than unsaturated fatty acids. Gas chromatography (GC) analysis of the biodiesel produced by either ex-situ or in-situ transesterification of the bacterial lipids further revealed the presence of methyl palmitate (34.90%), methyl stearate (35.48%) methyl myristate (29.79%), methyl linoleate (27.87%), and methyl palmitate (25.85) as the main esters. The estimated properties of the transesterified product indicated its potential for biodiesel applications.