Due to significant lipid and carbohydrate production as well as other useful properties such as high production of useful biomolecular substrates (e.g., lipids) and the ability to grow using non-potable water sources, algae are being explored as a potential high-yield feedstock for biofuels production. In both natural and engineered systems, algae can be exposed to a variety of environmental conditions that affect growth rate and cellular composition. With respect to the latter, the amount of carbon fixed in lipids and carbohydrates (e.g., starch) is highly influenced by environmental factors and nutrient availability. Understanding synergistic interactions between multiple environmental variables and nutritional factors is required to develop sustainable high productivity bioalgae systems, which are essential for commercial biofuel production. This article reviews the effects of environmental factors (i.e., temperature, light and pH) and nutrient availability (e.g., carbon, nitrogen, phosphorus, potassium, and trace metals) as well as cross-interactions on the biochemical composition of algae with a special focus on carbon fixation and partitioning of carbon from a biofuels perspective.