This study aimed to economically develop the yeast whole-cell biocatalyst from the lipase-secreting Magnusiomyces spicifer SPB2 to serve green biodiesel production. The scaled-up productions of lipases were optimized using a 5-L stirred-tank bioreactor. The maximum extracellular lipase and cell-bound lipase (CBL) yields of 1189.65 U/L and 5603.74 U/L were achieved at 24 h and 60 h, respectively, in the modified IMY medium (pH 5.0) containing 2% of soybean oil as a carbon source and 0.2% Gum Arabic as an emulsifying agent. The optimized cultivation was initiated with an inoculum size of 1 × 107 cells/mL and conducted under an aeration rate of 0.75 vvm with an agitation speed of 400 rpm. The obtained whole-cell biocatalyst of M. spicifer SPB2 was applied to catalyze the transesterification reaction using palm oil and methanol as substrates. The greatest yield of 97.93% fatty acid methyl ester (FAME) was reached at 72 h using a palm oil/methanol ratio of 1:7, indicating high methanol stability of the biocatalyst. Moreover, substrate homogenization accelerated the reaction to achieve FAME production of 97.01% at 48 h and remained stable afterwards. Without homogenization, the highest FAME of 98.20% was obtained at 60 h. The whole-cell biocatalyst prepared from lipase-secreting M. spicifer SPB2 at an up-scaled level greatly enhanced efficiency and feasibility for commercial biodiesel production through a green conversion process.