The present invention relates to a novel method for microalgae circulation breeding and biological oil co-production, wherein additional nutrition substances are not required to be added, and the method can be provided for low cost microalgae culture and biological oil co-production. The method mainly comprises a novel microalgae circulation breeding manner and application of the circulation breeding process to co-produce the biological oil, wherein the microalgae collected from each generation breeding is subjected to hydrolysis to obtain a water phase and an oil phase, the water phase is adopted as a microalgae circulation breeding nutrition liquid to be added to a microalgae breeding system so as to provide a carbon source, a nitrogen source, a phosphorus source and inorganic salts, and achieve a purpose of circulation breeding, and fatty acids contained in the oil phase are the products. The method for microalgae breeding has characteristics of high efficiency, rapid microalgae growth, no requirement of additional nitrogen source, phosphorus source and inorganic salts, biological oil co-production, high economic values and high industrial application prospects.