Biodiesel production from waste oil by lipase Candida sp. 99–125 assisted with cyclodextrin as additive was investigated in a solvent free system. The optimum reaction conditions was determined toward lipase dosage, agitation speed, cyclodextrin loading, water content and reuse ability of free lipase. A certain dosage of cyclodextrin showed a significant improvement of the reactions. However, the agitation speed should not be too high, to avoid breaking the weak bond between cyclodextrin and lipase. The optimal conditions were: free lipase dosage 70U/g oil (about 0.4wt% to the oil weight, when activity of lipase was 20,000IU), cyclodextrin to lipase 2:1(g/g), water content 2wt% (water/oil, g/g), and agitation speed 180rpm. Methanol was added 30 times at 1/30M equivalent each hour. Under the optimal conditions, the yield of FAMEs achieved 88%. After 5 cycles of reuse, no significant decrease in FAMEs yield was observed. The process has been successfully carried out at industrial scale in Shanghai, China.