Rhodotorula glutinis TISTR 5159 is oleaginous red yeast that accumulates both lipids and carotenoids. It was cultured in palm oil mill effluent (POME) with only the addition of ammonium sulfate and Tween 20 as a suitable nitrogen source and surfactant, respectively. Response surface methodology (RSM) was applied to optimize initial chemical oxygen demand (COD) in POME, C/N ratio, and Tween 20 concentration for concomitant production of lipids and carotenoids. Among three investigated factors, C/N ratio contributed a significant effect upon lipid and carotenoids production. Analysis of response surface plots revealed that the optimum C/N ratio for the biomass was 140, while that for lipid content and carotenoids were higher at 180 and 170, respectively. The high level of the nitrogen source (with a low C/N ratio) enhanced the biomass, making the accumulation of lipids and carotenoids less preferable. Hence, the two-stage process was attempted as an optimal way for cell growth in the first stage and product accumulation in the second stage. The lipid yield and carotenoid production obtained in the two-stage process were higher than those in the one-stage process. In the semi-continuous fermentation, R. glutinis TISTR 5159 accumulated high lipid content and produced a considerably high concentration of carotenoids during long-term cultivation. Additionally, efficient COD removal by R. glutinis TISTR 5159 was observed. The biodiesel produced from yeast lipids was composed mainly of oleic and palmitic acids, similar to those from plant oil.