The presence of high levels of free fatty acids (FFA) in oil is a barrier to one-step biodiesel production. Undesirable soaps are formed during conventional chemical methods, and enzyme deactivation occurs when enzymatic methods are used. This work investigates an efficient technique to simultaneously convert a mixture of free fatty acids and triglycerides (TAG). A partial soybean hydrolysate containing 73.04% free fatty acids and 24.81% triglycerides was used as a substrate for the enzymatic production of fatty acid methyl ester (FAME). Whole-cell Candida antarctica lipase B-expressing Aspergillus oryzae, and Novozym 435 produced only 75.2 and 73.5% FAME, respectively. Fusarium heterosporum lipase-expressing A. oryzae produced more than 93% FAME in 72 h using three molar equivalents of methanol. FFA and TAG were converted simultaneously in the presence of increasing water content that resulted from esterification. Therefore, F. heterosporum lipase with a noted high level of tolerance of water could be useful in the industrial production of biodiesel from feedstock that has high proportion of free fatty acids.