In recent years biodiesel production has attracted worldwide attention due to the awareness of fossil fuel depletion and microalgae biomass is considered a promising raw material for its formulation. The present study evaluated the effects of different levels of nitrogen limitation (37.5, 18.75, 9.375 mg L−1 NaNO3) on the growth, cell ultrastructure, and biochemical composition of a halophilic native strain of the green alga Picocystis salinarum as a potential raw material source for biodiesel. During a culture period of 20 days, growth measurements and photosynthetic pigments were estimated. Cell density, dry weight, and chlorophylls a, b content decreased with time as nitrogen limitation increase; however, carotenoid content increased. In addition, nitrogen limitation caused an progressive increase in the lipid and carbohydrate yield and a decrease in protein. The high N limitation (9.375 mg L−1) had a significant effect on the accumulation of total lipid content (33.87% dry weight). Carbohydrate content (30.98% dry weight) and protein content (1.89% dry weight) decrease. The lipid content showed a differential FAME profile with high saturated fatty acid values (996.08 μg g−1 dry weight) mainly palmitic acid, compare with the unsaturated ones that showed low values under high N limitation. The gradual increase of lipid content was also corroborated by transmission electron microscopy images with a single large lipid droplet cell formation. Therefore, evaluation of the algal culture conditions such as N limitation, as a strategy to maximize lipid content and improve the fatty acid profile in unexplored strain of P. salinarum, showed a potential biomass yield as a suitable candidate for biodiesel production. Graphical abstract: [Figure not available: see fulltext.].