Increased global warming due to the vehicular and industrial emissions has led to the development novel carbon sequestration technologies. In this investigation, exhaust gas from an internal combustion (IC) engine was used to grow microalgae. For this purpose, a twin cylinder, four stroke, water cooled direct injection (DI) developing power of 7.36 kW at a constant speed of 1500 rpm was used. The test engine was fuelled with diesel and operated at four different injection pressures, and subsequently with five different injection timings. The optimum injection pressure and injection timings were determined based on the results obtained from the performance and emission parameters of the test engine, resulting maximum carbon dioxide (CO2) exhaust of 3% v/v. A shell and tube heat exchanger was developed and designed to cool the exhaust gas of the engine. Then, the cooled exhaust gas was supplied to an algae reactor for growing microalgae. The algae growth before and after CO2 supply was determined and the results indicated higher growth rate in the algal media supplemented with CO2 compared to the control without CO2 addition. Such studies would aid in reducing the cost of algal cultivation and would further mitigate the greenhouse gas emissions (GHG).