Nanoparticles are commonly used for different purposes, including as photocatalysts, biosensors, antibacterial, antifungal, and anticancer agents. Recently, the synthesis of nanoparticles via biological techniques has become popular due to cost efficiency, sustainability, and the least secondary pollutants generation. Plants, algae, and microorganisms are primarily used to synthesize bio-nanoparticles. Algae-based nanoparticles have gained more attention due to their catalytic activity against emerging organic contaminants such as dyes, phenols, and organosulfur compounds. Nevertheless, a systemic evaluation of the potential of algae-based nanoparticles in environmental remediation is yet to be conducted. This paper reviews recent progress in the biosynthesis of algae-based nanoparticles and the potential use of algae-based nanoparticles in environmental remediation. Furthermore, the review examines the factors that affect the properties and behaviors of algae-based nanoparticles. Additionally, the review briefly discusses other medical and industrial applications as well as advantages over physically and chemically synthesized nanoparticles. Challenges associated with the production process and usage of algae-based nanoparticles are also discussed, including the difficulty of predicting the properties of nanoparticles and adapting to large-scale processes. Overall, algae-based nanoparticles have several advantages, including their high stability and surface activity due to the presence of surface functional groups from algae species used for the synthesis of algae-based nanoparticles. However, further research is required to address the knowledge gaps and potential key research areas. Graphical Abstract: (Figure presented.) © The Author(s) 2024.