Palm oil mill effluent (POME) is the wastewater produced during the palm oil sterilization process, which contains substantial amounts of nutrients and phosphorous that are harmful to the environment. High BOD and COD of POME are as high as 100,000 mg/L, which endanger the environment. Effective pre-treatment of POME is required before disposal. As microalgae have the ability of biosorption on nutrients and phosphorous to perform photosynthesis, they can be utilized as a sustainable POME treatment operation, which contributes to effective biofuel production. Microalgae species C. pyrenoidosa has shown to achieve 68 lipid production along with 71 nutrient reduction in POME. In this study, a brief discussion about the impacts of POME that will affect the environment is presented. Additionally, the potential of microalgae in treating POME is evaluated along with its benefits. Furthermore, the condition of microalgae growth in the POME is also assessed to study the suitable condition for microalgae to be cultivated in. Moreover, experimental studies on characteristics and performance of microalgae are being evaluated for their feasibility. One of the profitable applications of POME treatment using microalgae is biofuel production, which will be discussed in this review. However, with the advantages brought from cultivating microalgae in POME, there are also some concerns, as microalgae will cause pollution if they are not handled well, as discussed in the last section of this paper. © 2021 by the authors. Licensee MDPI, Basel, Switzerland.