Microalgae-based carbon dioxide (CO2) biofixation and biorefinery are the most efficient methods of biological CO2 reduction and reutilization. The diversification and high-value byproducts of microalgal biomass, known as microalgae-based biorefinery, are considered the most promising platforms for the sustainable development of energy and the environment, in addition to the improvement and integration of microalgal cultivation, scale-up, harvest, and extraction technologies. In this review, the factors influencing CO2 biofixation by microalgae, including microalgal strains, flue gas, wastewater, light, pH, temperature, and microalgae cultivation systems are summarized. Moreover, the biorefinery of Chlorella biomass for producing biofuels and its byproducts, such as fine chemicals, feed additives, and high-value products, are also discussed. The technical and economic assessments (TEAs) and life cycle assessments (LCAs) are introduced to evaluate the sustainability of microalgae CO2 fixation technology. This review provides detailed insights on the adjusted factors of microalgal cultivation to establish sustainable biological CO2 fixation technology, and the diversified applications of microalgal biomass in biorefinery. The economic and environmental sustainability, and the limitations and needs of microalgal CO2 fixation, are discussed. Finally, future research directions are provided for CO2 reduction by microalgae.