Abstract: Biofuels are type of sustainable energy produced from organic waste that play an useful role in reduction of emissions of CO2.The production of biodiesel fuel from renewable resource is a sustainable substitute for petroleum based fuels as economic and environmental sustainability. Algae is one of the most important source of biomass as it absorbs a large amount of carbon from the atmosphere and industries, and uses nutrients extracted from the industrial and municipal wastewater. Microalgae are more efficient and can produce about 10 times more amount of oil as compared to the plants which are rich in oil and they can be grown in open pounds or photo bioreactors. Algae-based biofuel has a great potential in revolutionizing the energy industry and fight against the greenhouse gas emissions