Algae, as a source of third-generation biofuel, represent a key component in the transition to sustainable energy. Unlike first- and second-generation biofuels, which rely on edible crops and lignocellulosic biomass, algae offer remarkable advantages due to their rapid growth rate, high oil yield, and minimal impact on ecosystems. The process of producing biofuel from algae involves photosynthesis, oil extraction, and conversion into biodiesel, biogas, or bio-kerosene, bringing both ecological and economic benefits. Microalgae stand out as the most promising source, with the potential to produce large quantities of biofuel on barren land, thereby reducing pressure on agricultural resources. The introduction of algae in biofuel production represents a significant step towards reducing dependency on fossil fuels and mitigating climate change.