The chapter explores the transformative potential of algae and their bioactive compounds in functional foods and alternative nutrition. The chapter begins by discussing the different types of algal pigments (such as chlorophylls, carotenoids, and phycobiliproteins) and their role, functions, and health benefits while considering their antioxidant capacities and multifunctional roles, with reference to improving food quality and/or nutritional value. It additionally illustrates the use of these substances in functional foods as established by studies that have been done previously on the abilities they possess to produce natural colorants for food, elongate shelf life, or offer beneficial health effects. The other section highlights how algal proteins are a sustainable source of nutrients that can replace conventional protein sources. Furthermore, it analyzes a broad spectrum of macronutrients and micronutrients, mostly the essential amino acids, fatty acids, vitamins, plus minerals available in algal proteins. The chapter further looks into reasons why taking algal protein is good for health, such as better metabolism and a more diverse diet. The sustainability aspects and environmental impacts of algal protein production are discussed, underscoring systems with low ecological footprints in terms of food supply. Industrial applications across multiple sectors demonstrated the commercial relevance and versatility of algae and their metabolites. Finally, this chapter ends by putting forward future pathways in algae protein utilization, advocating for broader applications and continued advancement in sustainable food systems.