The objective of this study is to select and characterize the candidate for synchronous water purification and lipid production from eight freshwater microalgae strains (Chlorella sp. HQ, C. emersonii, C. pyrenoidosa, C. vulgaris, Scenedesmus dimorphus, S. quadricauda, S. obiquus, Scenedesmus sp. LX1). The strains Chlorella sp. HQ, C. pyrenoidesa, and S. obliquus showed superiority in biomass accumulation, while the top biomass producers did not correspond to the top lipid producers. S. quadricauda achieved higher lipid content (66.1%), and Chlorella sp. HQ and S. dimorphus ranked down in sequence, with lipid content above 30%. Considering nutrient removal ability (total nitrogen (TN): 52.97%; total phosphorus (TP): 84.81%), the newly isolated microalga Chlorella sp. HQ was the possible candidate for water purification coupled with lipid production. To further investigate the lipid producing and nutrient removal mechanism of candidate microalga, the ultra structural changes especially the lipid droplets under different water qualities (different TN and TP concentrations) were characterized. The results elucidate the nutrient-deficiency (TN: 3.0 mg·L^-1; TP: 0.3 mg·L^-1) condition was in favor of forming lipid bodies in Chlorella sp. HQ at the sub-cellular level, while the biomass production was inhibited due to the decrease in chloroplast number which could further suppress the nutrient removal effect. Finally, a two-phase cultivation process (a nutrient replete phase to produce biomass followed by a nutrient deplete phase to enhance lipid content) was conducted in a photo-bioreactor for Chlorella sp. HQ to serve for algae-based synchronous biodiesel production and wastewater purification.