With the introduction of circularity and sustainability approaches, the biological wastewater treatment has significantly improved. The demand for sustainable and environmentally friendly wastewater treatment technology globally has generated interest in phyco-remediation systems based on algae for the exclusion of contaminants from water. Because of its high growth rates, photosynthetic activity, and multiplicity of metabolic pathways, algae have the ability to capture nutrients, bioaccumulate heavy metals, and biodegrade organic pollutants. Added value and high-tech solutions have improved remediation because of the recent advances in genetically modified strains, immobilization technology, and biorefinery concepts. Algal-based treatment, although significantly developed, is beset with many challenges such as scalability of operations, environmental fluctuation, inefficient harvesting, and high energy demands. Regulatory issues and undefined norms also hinder its commercial use. Thus, this chapter examines recent phyco-remediation developments, determines technological and economic challenges, and suggests hybrid systems, circular economy designs, and legislative lobbying to bridge the gaps.