Microalgae are promising biocatalysts for applications in sustainable fuel, food, and chemical production. Here, we describe culture collection screening, down-selection, and development of a high-productivity, halophilic, thermotolerant microalga, Picochlorum renovo. This microalga displays a rapid growth rate and high diel biomass productivity (34 g m−2 day−1), with a composition well-suited for downstream processing. P. renovo exhibits broad salinity tolerance (growth at 107.5 g L−1 salinity) and thermotolerance (growth up to 40 °C), beneficial traits for outdoor cultivation. We report complete genome sequencing and analysis, and genetic tool development suitable for expression of transgenes inserted into the nuclear or chloroplast genomes. We further evaluate mechanisms of halotolerance via comparative transcriptomics, identifying novel genes differentially regulated in response to high salinity cultivation. These findings will enable basic science inquiries into control mechanisms governing Picochlorum biology and lay the foundation for development of a microalga with industrially relevant traits as a model photobiology platform.