Rapid urbanization and population growth have significantly increased the generation of municipal wastewater (MWW) and the demand for freshwater, intensifying the need for sustainable treatment solutions. Conventional physical and chemical methods are effective for the treatment of MWW but face challenges of high operational costs, high energy demand, and the generation of secondary pollutants. In contrast, microalgae-based treatment offers a promising green alternative, as the nutrient-rich composition of MWW can support efficient biomass production of microalgae while simultaneously removing nitrogen, phosphorus, and organic matter. Further, the produced biomass can be utilized for the production of high-value products. In this context, the present chapter provides an in-depth overview of microalgal nutrient assimilation mechanisms, both direct and indirect, along with the nutritional, environmental, operational, and intrinsic factors influencing their growth and nutrient removal efficiency. The chapter also discusses potential applications of the produced microalgal biomass for biofuels, biofertilizers, animal feed, and high-value bioproducts, alongside recent advances in microbial consortia, immobilized cultivation, and artificial intelligence-driven process optimization. The integration of microalgae cultivation with MWW treatment not only addresses environmental and ecological threats caused by it but also enables biomass valorization, contributing to the circular bioeconomy and promoting environmental sustainability.