Non-food-based biofuel feedstocks are in high demand worldwide. Among the various feedstocks, microalgae are the most promising feedstock for mitigating atmospheric CO2 and producing biodiesel. In this study, various concentrations of CO2, from 0.03 to 12%, were used to investigate their effect on the cell growth, biomass and lipid production and fatty acid composition of Dunaliella sp. in a closed photobioreactor. The results showed that the highest biomass and total lipids, 521 mg/L/d and 40 mg/L/d, respectively, were produced with 5% CO2 aeration during the logarithmic growth phase. The oleic acid (18:1n9c) and elaidic acid (18:1n9t) contents were increased approximately two fold. The physiological responses of Dunaliella sp. at 10% CO2 were similar to those at 5% CO2. Therefore, the present results suggest that 5–10% is a suitable CO2 concentration range for Dunaliella sp. growth to mitigate atmospheric CO2 and increase biofuel production.