Macro- and microalgae-based foods are becoming popular due to their high nutritious value. The algal biomass is enriched with polysaccharides, protein, polyunsaturated fatty acids, carotenoids, vitamins and minerals. However, the most promising fraction is polysaccharides (PS) or their derivatives (as dietary fibers) which are not entirely fermented by colonic bacteria hence act as potential prebiotic. Primarily, algae become famous as prominent protein sources. Recently, these are widely adopted as functional food (e.g., desserts, dairy products, oil-derivatives, pastas etc.) or animal feed (for poultry, cattle, fish etc.). Besides prebiotic and balanced amino acids source, algae derived compounds implied as therapeutics due to comprising bioactive properties to elicit immunomodulatory, antioxidative, anticancerous, anticoagulant, hepato-protective, and antihypertensive responses. Despite the above potentials, broader research determinations are inevitable to explore these algal compounds until microalgae become a business reality for broader and specific applications in all health domains. However, scale up of algal bioprocess remains a major challenge until commercial affordability is accomplished which can be possible by discovering their hidden potentials and increasing their value and application prospects. This review provides an overview of the significance of algae consumption for several health benefits in humans and animals mainly as prebiotics, however their functional food and animal feed potential are briefly covered. Moreover, their potential to develop an algal-based food industry to meet the people's requirements not only as a sustainable food solution with several health benefits but also as therapeutics is inevitable.