In this study, palm oil mill effluent (POME) was used as an alternative medium for algal biomass and lipid production. The influence of different concentrations of filtered and centrifuged POME in sea water (1, 5, 10 and 15) on microalgal cell growth and lipid yield were investigated. Both Nannochloropsis oculata and Tetraselmis suecica had enhanced cell growth and lipid accumulation at 10 POME with maximum specific growth rate (0.21 d-1 and 0.20 d-1) and lipid content (39.1 ± 0.73 and 27.0 ± 0.61), respectively, after 16 days of flask cultivation. The total Saturated Fatty Acid (SFA) (59.24, 68.74); Monounsaturated Fatty Acid (MUFA) (15.14, 12.26); and Polyunsaturated Fatty Acid (PUFA) (9.07, 8.88) were obtained for N. oculata and T. suecica, respectively, at 10 POME. Algal cultivation with POME media also enhanced the removal of Chemical Oxygen Demand (COD) (93.6-95), Biological Oxygen Demand (BOD) (96-97), Total Organic Compound (TOC) (71-75), Total Nitrogen (TN) (78.8-90.8) and oil and grease (92-94.9) from POME. © 2016 Taylor & Francis Group, LLC.