This study examined the use of Chlorella vulgaris for the simultaneous bioremediation of municipal wastewater and production of biodiesel. We tested the effect of wastewater dilution on C. vulgaris growth in filtered and sterilized wastewater, sterilized wastewater, and untreated wastewater. Growth was the greatest in untreated wastewater, suggesting that certain wastewater components, such as bacteria, may promote microalgal growth. We confirmed the presence of beneficial bacteria by denaturing gradient gel electrophoresis analysis and inoculation of wastewater bacteria into microalgal cultures in artificial medium. Furthermore, we employed a semi-continuous cultivation process that successfully combined the advantages of indigenous bacteria with a high level of inoculum. Finally, cells grown in wastewater contained high levels of useful fatty acids. Collectively, our data suggest that it may be feasible to use wastewater-grown C. vulgaris biomass for simultaneous bioremediation and biodiesel production.