Food production must rise significantly since the global population is predicted to exceed 9.7 billion by 2050. Nearly 3.5 million fatalities annually and 45% of all child mortality are caused by malnutrition, resulting in a serious global health challenge. Since algae contain many bioactive substances that provide several health advantages, their usage in functional meals has sparked significant attention. Algae, specifically macroalgae like Ulva, Gracilaria, Laminaria, and microalgae like Spirulina, Chlorella, and Dunaliella, naturally contain nutrients of excellent quality like proteins, polyunsaturated fatty acids, polysaccharides, vitamins, minerals, and antioxidants. These bioactive components have anti-inflammatory, antiobesity, antidiabetic, antibacterial, and anticancer properties that enhance human health. Their inclusion in functional meals boosts the nutritional value and serves as a sustainable method to address increasing global health challenges and nutritional deficiencies. This chapter covers the bioactive components that are present in different types of algae, how they work to improve health, and how they may be used to produce functional food products. The main challenges to their use in dietary supplements are also addressed, and approaches that will ultimately lead to the marketing of algae as a beneficial and feasible food source are discussed.