Valorization of herbal extraction residues (HERs) into value-added products is pivotal for the sustainability of Chinese medicine industry. Here, seven different enzymatic hydrolysates of dilute acid pretreated HERs were evaluated for lipid production by Cutaneotrichosporon oleaginosum. Among them, the highest sugar yield via hydrolysis and the maximum lipid production were obtained from Radix paeoniae alba residue (RPAR). More interestingly, high proportion of sugar polymers was disintegrated into fermentable sugars during the pretreatment step, allowing a cheap non-enzymatic route for producing sugars from RPAR. A repeated dilute acid pretreatment gained a high sugar concentration of 241.6 g/L through reusing the pretreatment liquor (PL) for four times. Biomass, lipid concentration, and lipid content achieved 49.5 g/L, 35.7 g/L and 72.2 %, respectively, using fed-batch culture of PL. The biodiesel parameters indicated lipids produced from HERs were suitable for biodiesel production. This study offers a cost-effective way to upgrade the HERs waste into micro-biodiesel.