Current research investigating the importance of diversity for biofuel lipid production remains limited. In contrast, the relationship between diversity and productivity within terrestrial and algal primary producers has been well documented in ecology. Hence, we set out to investigate, experimentally, whether diversity may also affect lipid production in micro-algae. We investigated the growth and lipid production of micro-algae using species from all major algal groups. Algae were grown in a large number of treatments differing in their diversity level. Additionally, we compared the growth and lipid production of laboratory communities to natural lake and pond phytoplankton communities of different diversity. Our results show that lipid production increased with increasing diversity in both natural and laboratory micro-algal communities. The underlying reason for the observed 'diversity-productivity' relationship seems to be resource use complementarity. We observed higher lipid production of highly diverse algal communities under the same growth and resource supply conditions compared to monocultures. Hence, the incorporation of the ecological advantages of diversity-related resource-use dynamics into algal biomass production may provide a powerful and cost effective way to improve biofuel production.