The biotechnological exploitation of cyanobacteria and microalgae represents a cutting-edge approach to discovering sustainable and potent bioactive compounds with wide-ranging applications in pharmaceuticals, nutraceuticals, agriculture, and environmental management. These microorganisms are prolific producers of a diverse array of bioactive molecules including pigments, proteins, polysaccharides, vitamins, and lipids, each exhibiting unique and valuable biological activities such as antioxidant, anti-inflammatory, antimicrobial, and anticancer properties. Recent advances in genetic and metabolic engineering have significantly enhanced the production of these compounds by optimizing metabolic pathways, and creating high-yield strains. Additionally, innovative cultivation systems and bioprocessing technologies have improved the scalability and economic viability of algae-based production. This book chapter highlights the latest developments in the field, emphasizing the potential of cyanobacteria and microalgae as sustainable and versatile sources of bioactive compounds. It also explores advancements in genetic and metabolic engineering that have propelled the field forward. Future directions include the exploration of novel strains, further optimization of production processes, and the integration of these biotechnological advances into commercial applications across various industries. By harnessing the full potential of cyanobacteria and microalgae, we can develop innovative solutions to meet the growing demand for natural and effective bioactive compounds.