Palm empty fruit bunches (EFBs) are abundant lignocellulosic wastes from palm oil mills. They are potential sources of sugars which can be converted to microbial lipids by oleaginous yeasts. To produce sugars from EFB, two-step and one-step hydrolysis reactions were performed. In the first step, the use of diluted sulfuric acid (0.5 % w/v) hydrolyzed hemicelluloses and released mainly pentoses, and in the second step of hydrolysis of residual pulp using 2.5 % (w/v), sulfuric acid released more hexoses. The use of 2.5 % (w/v) sulfuric acid in one-step hydrolysis of holocelluloses released the highest amount of sugars (38.3 g/L), but it also produced high concentration of potential inhibitors (>1 g/L). Three oleaginous yeasts, Rhodotorula mucilaginosa, Kluyveromyces marxianus, and Candida tropicalis, were isolated and screened for their ability to convert EFB hydrolysates into lipids. These yeasts grew well and produced lipids from EFB hemicellulose and holocellulose hydrolysate after potential inhibitors were removed. This study shows that EFB can be used for lipid production.