Biofuel continues to thrive as an outstanding source of renewable energy for the global community. Several resources have been proposed as sources of feedstocks for biofuel; however, some of these have shortcoming. The use of biomass such as algae as a source of feedstock for biofuel is undoubtedly sustainable and green. Unfortunately, the use of algae oil for biodiesel production is underutilized in developing countries. Therefore, this study focuses on finding a better understanding of the evolving prospects and current challenges facing biodiesel production from algae oil in developing countries. The study revealed that less attention is given to the use of algae oil in biodiesel production due to poor enlightenment on biotechnology, high poverty rates, government policies, business strategies, and poor funding of research. Interestingly, several species of algae that can serve as sustainable feedstocks for biodiesel production have been identified in developing countries. It is evident that algae oil has properties that qualify it for the production of biodiesel with fuel properties that meet both the American Society for Testing and Materials and the European standards for biodiesel.