Nanotechnology has revolutionized the drug delivery system offering novel solutions to enhance the therapeutic potential of algal bioactive compounds. Algae are rich in diverse bioactive compounds such as polysaccharides, polyphenols, and peptides that have promising antidiabetic properties. India has about 77 million people of above 18 years suffering from diabetes type 2 and almost 25 million are prediabetes. The potential of these compounds is usually limited due to challenges like poor bioavailability, rapid degradation, and non-specific targeting. This chapter delves into the application of nanotechnology to overcome these challenges, focusing on the development of advanced drug delivery systems specifically designed to enhance antidiabetic properties of algal bioactive compounds. The implementation of nanocarriers like nanofibers, nanoparticles, nanoliposomes, nanohydrogels, nanosomes, and nanoemulsions offers significant advantages, including improved solubility and targeted delivery. These carriers facilitate targeted drug release to specific tissues like pancreatic cells and thereby enhance therapeutic outcomes. The chapter focuses on key nanotechnological approaches in terms of their ability to enhance therapeutic potential. It also aims to provide an overview of the emerging field of nanotechnology-enhanced algal therapies for diabetes, highlighting the potential for innovative diabetic treatment strategies in conjunction with nanotechnological advancements.