The extraction, characterization, purification and upgrading of algal lipids was examined, utilizing Scenedesmus acutus microalgae grown with flue gas from a coal-fired power plant. Lipid extraction was achieved using a procedure based on the Bligh-Dyer method, modified so as to utilize a significantly decreased solvent:biomass ratio than the original protocol. Both activated carbon and K10 montmorillonite were found to function as efficient adsorbents for the removal of chlorophyll, phospholipids and sterols from the crude algae oil. The yield of purified lipids using this approach was similar to that obtained by in situ transesterification of the lipids in Scenedesmus acutus, confirming that adsorption is an effective method for the removal of nonesterifiable lipids. During the deoxygenation of the purified algae oil at 260 °C over a Ni-Al layered double hydroxide catalyst, deactivation of the catalyst was observed, attributed to the presence of highly unsaturated lipid chains which can act as poisons by adsorbing strongly to the catalyst surface and/or acting as precursors to coke formation. However, upgrading at 300 °C gave better results, the liquid product consisting of ~99 wt% hydrocarbons, diesel-like (C10-C20) hydrocarbons constituting 76 wt% of the liquid after 4 h on stream.