Microalgae are autotrophic microorganisms having extremely high photosynthetic efficiency and are valued as rich source of lipids, hydrocarbons, and other complex oils for biodiesel besides being an invaluable source of bioethanol, biomethane, and biohydrogen. Biodiesel produced from oilseed crops such as jatropha and soy have lower yields per unit land area and threaten food security. Indeed, microalgae have higher oil yields amounting to about 40 times more oil per unit area of land in comparison to terrestrial oilseed crops such as soy and canola. Further, microalgae production does not require arable land for cultivation. Biofuel is regarded as a proven clean energy source and several entrepreneurs are attempting to commercialize this renewable source. Technology for producing and using biofuel has been known for several years and is frequently modified and upgraded. In view of this, a review is presented on microalgae as second generation biofuel. Microalgal farming for biomass production is the biggest challenge and opportunity for the biofuel industry. These are considered to be more efficient in converting solar energy into chemical energy and are amongst the most efficient photosynthetic plants on earth. Microalgae have simple cellular structure, a lipid-rich composition, and a rapid rate of reproduction. Many microalgal strains can be grown in saltwater and other harsh conditions. Some autotrophic microalgae can also be converted to heterotrophic ones to accumulate high quality oils using organic carbon. However, there are several technical challenges that need to be addressed to make microalgal biofuel profitable. The efficiency of microalgal biomass production is highly influenced by environmental conditions, e.g., light of proper intensity and wavelength, temperature, CO 2 concentration, nutrient composition, salinities and mixing conditions, and by the choice of cultivation systems: open versus closed pond systems, photobioreactors. Currently, microalgae for commercial purpose are grown mostly in open circular/elongated "raceway" ponds which generally have low yields and high production costs. However, a hybrid system combining closed photobioreactor and open pond is a better option. The biggest hurdle in commercialization of microalgal biofuel is the high cost and energy requirement for the microalgal biomass production, particularly agitation, harvesting, and drying of biomass. In order to conserve energy and reduce costs, algae are often harvested in a two-step process involving flocculation followed by centrifugation, filtration, or micro-straining to get a solid concentration. However, the major bottlenecks in algal biodiesel production within the cell can be identified and handled by adopting a system approach involving transcriptomics, proteomics, and metabolomics. Research and developments in the field of new materials and advanced designs for cultivation in closed bioreactors, use of waste water for biomass production, screening of efficient strains, high-value coproduct strategy,...