Direct biodiesel production from wet fungal biomass may significantly reduce production costs, but there is a lack of fast and cost-effective processing technology. A novel thin film continuous flow process has been applied to study the effects of its operational parameters on fatty acid (FA) extraction and FA to fatty acid methyl ester (FAME) conversion efficiencies. Single factor experiments evaluated the effects of catalyst concentration and water content of biomass, while factorial experimental designs determined the interactions between catalyst concentration and biomass to methanol ratio, flow rate, and rotational speed. Direct transesterification (DT) of wet Mucor plumbeus biomass at ambient temperature and pressure achieved a FA to FAME conversion efficiency of >90% using 3 wt/v % NaOH concentration, if the water content was ≤50% (w/w). In comparison to existing DT methods, this continuous flow processing technology has an estimated 90–94% reduction in energy consumption, showing promise for up-scaling.