The yeast Candida tropicalis, isolated from petroleumcontaminated soil in India, was found to be the potent producer of biosurfactant in mineral salt media containing diesel oil as the carbon source and found to be an efficient degrader of diesel oil (98{\%}) over a period of 10 days. The crude biosurfactant decreased the surface tension of cell-free broth, 78 to 30 mN/m, with a large oil displacement area and highly positive drop collapse test. The crude biosurfactant was purified using silica gel column chromatography followed by dialysis. With the use of Fourier transform infrared (FT-IR) spectroscopy, in combination with gas chromatography-mass spectrometry (GC-MS) analysis, chemical structures of the purified biosurfactant was identified as sophorolipid species. Involvement of biosurfactant in physiological mechanism of diesel adsorption on yeast cell surface was characterized based on zeta potential. When diesel oil was emulsified with biosurfactant, the surface charge of the diesel was modified, resulting in more adsorption of diesel on yeast cell surface. Biosurfactant production by yeast species was monitored using scanning electron microscopy (SEM) analysis and found that yeast species could form thick mat of mucilaginous biosurfactant that could interconnect the individual cells. Uptake of diesel oil by C. tropicalis was elucidated through transmission electron microscopy (TEM) analysis. Interestingly, it was observed that internalization of diesel oil droplet was taking place, suggesting a mechanism similar in appearance to active pinocytosis. {\textcopyright} 2012 Taylor and Francis Group, LLC.