The last few years have witnessed significant advances in the field of algal genomics. Complete genome sequences from the red alga Cyanidioschyzon merolae and the diatom Thalassiosira pseudonana have been published, the genomes for two more algae (Chlamydomonas reinhardtii and Ostreococcus tauri) are nearing completion, and several others are in progress or at the planning stage. In addition, large-scale cDNA sequencing projects are being carried out for numerous algal species. This wealth of genome data is serving as a powerful catalyst for the development and application of recombinant techniques for these species. The data provide a rich resource of DNA elements such as promoters that can be used for transgene expression as well as an inventory of genes that are possible targets for genetic engineering programs aimed at manipulating algal metabolism. It is not surprising therefore that significant progress in the genetic engineering of eukaryotic algae is being made. Nuclear transformation of various microalgal species is now routine, and progress is being made on the transformation of macroalgae. Chloroplast transformation has been achieved for green, red, and euglenoid algae, and further success in organelle transformation is likely as the number of sequenced plastid, mitochondrial, and nucleomorph genomes continues to grow. Importantly, the commercial application of algal transgenics is beginning to be realized, and algal biotechnology companies are being established. Recent work has shown that recombinant proteins of therapeutic value can be produced in microalgal species, and it is now realistic to envisage the genetic engineering of commercially important species to improve production of valuable algal products. In this article we review the recent progress in algal transgenics and consider possible future developments now that phycology has entered the genomic era.