Carbon-neutral sustainable approaches are highly demanding in the coal energy sector. Coal mine effluent disposal is a severe challenge with crucial concern issues of salinity hazard and heavy metal contamination due to long-duration water and coal interaction. The medium to the high salinity of coal mine effluent leads towards irrigation unsuitability due to the negative impact upon infiltration and permeability of nutrients from the soil to plant. Focusing on the international irrigation water quality standards given by the Food and Agriculture Organization (FAO) of the United Nations, most coal mine effluents are considered negatively impacting crops, soil fertility, groundwater, and aquatic life. Therefore, the current study investigates the direct cultivation suitability of Chlorella pyrenoidosa to simultaneously treat coal mine effluent for salinity removal and biomass production. Initially, C. pyrenoidosa culture adaptation in varying concentrations of coal mine effluents (25%–100%) in coal mine effluent, which are collected from two different points of coal mine named as coal mine effluent 1 (CME1) and coal mine effluent 2 (CME2). Evaluating C. pyrenoidosa growth kinetics, it was observed that the doubling time extended from 2.25 days (100% BG-11 as a medium; control) to 4.33 days (100% CME as a medium). Interestingly, the highest value for biomass production was 1.78 ± 0.12 g/ L with 25% CME 1 supplemented with essential growth nutrients; this value lies near 100% BG11 supplemented growth, 1.81 ± 0.05 g/L. In the current study, taking salinity removal as a prime concern, 100% utilization of CME-2 in place of BG-11 medium was very significant for salinity reduction from 4.80 ± 0.50 mS/cm (initial) to 0.98 ± 0.02 mS/cm (final) during 14 days batch growth. In continuation of that, the significant finding was salinity reduction of both samples (50% and 75% sample) to the level of 0.7 mS/ cm, which lies under the FAO guidelines for irrigation. Present findings also revealed an alternative to conventional processes, i.e., thermal and membrane desalination. Microalgae-assisted desalination is a novel, energy-efficient, eco-sustainable, cost-effective, and long-term operational approach. It has good potential to treat medium to sub-optimal salinity of coal mine effluent coupled with high-value biomass production.