The burgeoning demand for protein, exacerbated by population growth and recent disruptions in the food supply chain, has prompted a rapid exploration of sustainable protein alternatives. Among these alternatives, algae stand out for their environmental benefits, rapid growth, and rich protein content. However, the widespread adoption of algae‐derived proteins faces significant challenges. These include issues related to harvesting, safety, scalability, high cost, standardization, commercialization, and regulatory hurdles. Particularly daunting is the efficient extraction of algal proteins, as their resilient cell walls contain approximately 70% of the protein content, with conventional methods accessing only a fraction of this. Overcoming this challenge necessitates the development of cost‐effective, scalable, and environmentally friendly cell disruption techniques capable of breaking down these rigid cell walls, often laden with viscous polysaccharides. Various approaches, including physical, chemical, and enzymatic methods, offer potential solutions, albeit with varying efficacy depending on the specific algal strain and energy transfer efficiency. Moreover, there remains a pressing need for further research to elucidate the functional, technological, and bioaccessible properties of algal proteins and peptides, along with exploring their diverse commercial applications. Despite these obstacles, algae hold considerable promise as a sustainable protein source, offering a pathway to meet the escalating nutritional demands of a growing global population. This review highlights the nutritional, technological, and functional aspects of algal proteins and peptides while underscoring the challenges hindering their widespread adoption. It emphasizes the critical importance of establishing a sustainable trajectory for food production, with algae playing a pivotal role in this endeavor.