The quest for cleaner and sustainable energy sources is crucial, considering the current scenario of a steep rise in energy consumption and the fuel crisis, exacerbated by diminishing fossil fuel reserves and rising pollutants. In particular, the bioaccumulation of hazardous substances like trivalent chromium has not only disrupted the fragile equilibrium of the ecological system but also poses significant health hazards to humans. Microalgae emerged as a promising solution for achieving sustainability due to their ability to remediate contaminants and produce greener alternatives such as biofuels. This integrated approach provides an ambitious strategy to address global concerns pertaining to economic stability, environmental degradation, and the energy crisis. This study investigates the intricate defense mechanisms deployed by freshwater microalgae Chlorella minutissima in response to Cr (III) toxicity. The microalga achieved an impressive 92% removal efficiency with an IC50 value of 200 ppm, illustrating its extraordinary resilience towards chromium-induced stress. Furthermore, this research embarked on thorough explorations encompassing morphological, pigment-centric, and biochemical analyses, aimed at revealing the adaptive strategies associated with Cr (III) resilience, as well as the dynamics of carbon pool flow that contribute to enhanced lipid and extracellular polysaccharide (EPS) synthesis. The FAME profile of the biodiesel produced complies with the benchmark established by American and European fuel regulations, emphasizing its suitability as a high-quality vehicular fuel. Elevated levels of ROS, TBARS, and osmolytes (such as glycine-betaine), along with the increased activity of antioxidant enzymes (CAT, GR, and SOD), reveal the activation of robust defense mechanisms against oxidative stress caused by Cr (III). The finding of this investigation presents an effective framework for an algal-based biorefinery approach, integrating pollutant detoxification with the generation of vehicular-quality biodiesel and additional value-added compounds vital for achieving sustainability under the concept of a circular economy.