Diversification of biofuel sources has become an important energy issue. Bio-hydrogen production from microalgae has received much attention recently. However, commercial production of microalgae biofuels including bio-hydrogen is still not feasible due to the low biomass concentration and costly downstream processes. It has been reported that exposing some species of algae to environmental stress, e.g., by depriving the algae of sulfur in light, it is possible to produce significant amounts of hydrogen gas. However, this technology is still in its infancy and there is significant potential for technology development and improvement at every level. This review discusses the biological hydrogen production by microalgae (direct bio-photolysis, indirect bio-photolysis, photo fermentation and dark fermentation) and optimization of key parameters to enhance hydrogen production. The effects of different stress reactions on production of the valuable components are described. This knowledge can be used to evaluate the possibilities for producing hydrogen and high value products efficiently in the same process. Further studies of these topics may result in a sustainable process where solar energy can be converted into hydrogen in an integrated manner, where production efficiencies are sufficient for an economic exploitation of algal technology using algal stress reactions.