Wastewater-integrated microalgal cultivation offers a sustainable pathway to reduce biofuel production costs while simultaneously addressing nutrient-rich effluent management. In this study, matured compost leachate was systematically evaluated as a sole cultivation medium for Desmodesmus sp. under different dilution regimes, with emphasis on growth kinetics, wastewater remediation efficiency, lipid accumulation behavior, and biodiesel quality. Desmodesmus sp. successfully acclimatized to 100% undiluted matured compost leachate within four days and maintained stable mixotrophic growth without dilution or pre-treatment. Cultivation in undiluted leachate achieved a maximum biomass concentration of 2.69 ± 0.09 g L⁻¹, representing an approximately fourfold increase compared to Bold’s Basal Medium. Concurrently, high treatment efficiencies were obtained, with chemical oxygen demand removal of 82.6%, total nitrogen reduction of 60–72%, and total phosphorus removal of 65–66%, confirming effective integration of biomass production with wastewater remediation. Lipid biosynthesis was strongly governed by nitrogen availability, with lipid concentration increasing from 0.32 g L⁻¹ during exponential growth to 0.72 g L⁻¹ under nitrogen-depleted stationary conditions. Fatty acid methyl ester profiling revealed a stress-induced shift toward saturated and monounsaturated fatty acids, accounting for 75.6% of total fatty acids and dominated by palmitic acid (C16:0). This compositional restructuring resulted in biodiesel properties characterized by a high cetane number of 64.5, low iodine value, and oxidative stability exceeding 30 h, meeting or surpassing international biodiesel quality benchmarks.