The biorefinery industry is witnessing a transition from fossil and chemical-based processes to more sustainable practices, with a growing emphasis on using renewable resources. Sophorolipids, a promising group of biosurfactants, present a viable substitute for conventionally produced surfactants. This study focuses on microbial fermentation using yeast and lipid substrate for sophorolipid production. The life cycle assessment (LCA) methodology was employed to identify environmental hotspots of the process and to assess the environmental benefits resulting from the replacement of raw rapeseed cooking oil (base scenario) with waste cooking oil, reduction of process electricity consumption, and increased sophorolipid yield. By compiling scenarios with the lowest environmental impact, a best-case scenario was created. The results revealed that the environmental impact of sophorolipid production could be reduced by 50% in the best-case scenario compared to the base scenario. This research provides valuable insights into the environmental optimization of the fermentation process and through the application of LCA highlights the potential for the reduction of negative environmental impact of sophorolipid production, contributing to the ongoing transition from petroleum oil and petrochemical refineries to sustainable biorefineries.