Thirty microalgal strains were screened in the laboratory for their biomass productivity and lipid content. Four strains (two marine and two freshwater), selected because robust, highly productive and with a relatively high lipid content, were cultivated under nitrogen deprivation in 0.6-L bubbled tubes. Only the two marine microalgae accumulated lipid under such conditions. One of them, the eustigmatophyte Nannochloropsis sp. F&M-M24, which attained 60% lipid content after nitrogen starvation, was grown in a 20-L Flat Alveolar Panel photobioreactor to study the influence of irradiance and nutrient (nitrogen or phosphorus) deprivation on fatty acid accumulation. Fatty acid content increased with high irradiances (up to 32.5% of dry biomass) and following both nitrogen and phosphorus deprivation (up to about 50%). To evaluate its lipid production potential under natural sunlight, the strain was grown outdoors in 110-L Green Wall Panel photobioreactors under nutrient sufficient and deficient conditions. Lipid productivity increased from 117 mg/L/day in nutrient sufficient media (with an average biomass productivity of 0.36 g/L/day and 32% lipid content) to 204 mg/L/day (with an average biomass productivity of 0.30 g/L/day and more than 60% final lipid content) in nitrogen deprived media. In a two-phase cultivation process (a nutrient sufficient phase to produce the inoculum followed by a nitrogen deprived phase to boost lipid synthesis) the oil production potential could be projected to be more than 90 kg per hectare per day. This is the first report of an increase of both lipid content and areal lipid productivity attained through nutrient deprivation in an outdoor algal culture. The experiments showed that this marine eustigmatophyte has the potential for an annual production of 20 tons of lipid per hectare in the Mediterranean climate and of more than 30 tons of lipid per hectare in sunny tropical areas. Biotechnol. Bioeng. 2009;102: 100–112. © 2008 Wiley Periodicals, Inc.