In the present study, native grass (Cyperus distans) was utilized for the production of lipid using Yarrowia lipolytica MTCC 9519. Initially, pretreatment methods using hydrothermal and alkaline delignification were performed to obtain cellulose rich liquid fractions. Delignified native grass biomass was enzymatically hydrolyzed to convert non fermentable sugars in to fermentable sugars. The growth of Y. lipolytica MTCC 9519 by utilizing pretreated native grass hydrolysate was evaluated. The yield and concentration of total reducing sugars after enzyme hydrolysis were found to be 378 ± 35 mg/g of pretreated biomass and 28.64 g/L ± 1.25 g/L, respectively. When pretreated, delignified native grass hydrolysate was used with (NH4)2SO4 (30C/N ratio) and sodium n-octanoate (0.4% w/w), the dry cell weight and lipid accumulation of Y. lipolytica MTCC 9519 reached about 19.88 ± 1.54 g/L and 53.62% (w/w) respectively after 96 h. Thus, native grass could become a promising substrate for biolipid production.