The imminent depletion of fossil fuels and the surging global demand for renewable energy have led to the search for nonconventional energy sources. After a few decades of trial and error, the world is now testing the sources of the third generation of fossil fuels, which contain for most parts microalgae. With more than 80% oil content, being adaptable in growth parameters and highly versatile, microalgae are highly promising sources of biofuels in the present time. The present article makes a sweeping attempt to highlight the various methods employed for cultivation of microalgae, techniques to harvest and extract biomass from huge algal cultures, as well as their downstream production and processing procedures. The advantages, limitations, and challenges faced by each of them have been described to some extent. Major concerns pertaining to biofuels are supposed to be their environmental sustainability and economic viability along with their cost effectiveness. This would require a great deal of empirical data on existing systems and a great deal of optimization to generate a more robust one. We have concluded our article with a SWOT analysis of using algae for biodiesel production in a tabulated form.