An economic and environmentally friendly approach of overcoming the problem of fossil CO 2 emissions would be to reuse it through fixation into biomass. Carbon dioxide (CO 2 ), which is the basis for the formation of complex sugars by green plants and microalgae through photosynthesis, has been shown to significantly increase the growth rates of certain microalgal species. Microalgae possess a greater capacity to fix CO 2 compared to C 4 plants. Selection of appropriate microalgal strains is based on the CO 2 fixation and tolerance capability together with lipid potential, both of which are a function of biomass productivity. Microalgae can be propagated in open raceway ponds or closed photobioreactors. Biological CO 2 fixation also depends on the tolerance of selected strains to high temperatures and the amount of CO 2 present in flue gas, together with SO x and NO x . Potential uses of microalgal biomass after sequestration could include biodiesel production, fodder for livestock, production of colorants and vitamins. This review summarizes commonly employed microalgal species as well as the physiological pathway involved in the biochemistry of CO 2 fixation. It also presents an outlook on microalgal propagation systems for CO 2 sequestration as well as a summary on the life cycle analysis of the process.