Replacing fossil fuels with biofuels is a possible strategy to solve the problems of global greenhouse gas emission and exhaustible resource depletion. The development of clean, renewable energy has attracted considerable interest from academic and industrial circles. Microalgae are regarded as the most promising cell factory for biodiesel production because of their unique properties, e.g. rapid growth rate, high cell density, great oil productivity and no competition with food production over the use of arable land. However, the high production costs mean that microalgal biofuels still have far to go to gain market acceptance in the short-term. In this chapter, recent advances in the technologies underpinning microalgae-to-biofuels systems are reviewed. Approaches towards improving the economics of microalgal oil, e.g. genetic engineering and biorefinery-based integrated production strategy, are also suggested. Technological advances and optimized production systems will determine the economic viability and environmental sustainability of algae-based biofuel.