Depletion of fossil fuels, rising demands, and emission of greenhouse gases have upsurged considerable global interest in the pursuit of alternative renewable energy resources. Microalgae have recently emerged as a potential candidate for renewable energy production. They sequester a large amount of lipids in their cell which make them suitable agents for the production of biofuels like biodiesel, bioethanol, and biohydrogen. They are fast-growing and require no agricultural land or fresh water for cultivation. Their growth can be increased several fold irrespective of seasonal changes. Being a third-generation feedstock, microalgae generally do not hamper the human food chain. Furthermore, the absence of lignocellulosic materials in their cell wall makes the pretreatment processes easier and reduces the overall production cost. In addition, they produce a large array of high-value products which gain considerable interest in healthcare and biopharmaceutical industries. Despite microalgae being a potential source of bioenergy and value-added products, this industry is still present in its early days. The use of recombinant DNA technology can make great advances in algal strain improvement for the large-scale or industrial production of biofuels or other value-added products. In this study we will focus on the role of microalgae in biofuel and energy production, various value-added products produced by microalgae and their applications and the future prospects of the microalgae industry.