Widely used in biomedical and bioanalytical applications, the detonation nanodiamonds (NDs) are generally considered to be biocompatible and non-toxic to a wide range of eukaryotic cells. Due to their high susceptibility to chemical modifications, surface functionalisation is often used to tune the biocompatibility and antioxidant activity of the NDs. The response of photosynthetic microorganisms to redox-active NDs is still poorly understood and is the focus of the present study. The green microalga Chlamydomonas reinhardtii was used to assess the potential phytotoxicity and antioxidant activity of NDs hosting hydroxyl functional groups at concentrations of 5–80 μg NDs/mL. The photosynthetic capacity of microalgae was assessed by measuring the maximum quantum yield of PSII photochemistry and the light-saturated oxygen evolution rate, while oxidative stress was assessed by lipid peroxidation and ferric-reducing antioxidant capacity. We demonstrated that hydroxylated NDs might reduce cellular levels of oxidative stress, protect PSII photochemistry and facilitate the PSII repair under methyl viologen and high light associated stress conditions. Factors involved in this protection may include the low phytotoxicity of hydroxylated NDs in microalgae and their ability to accumulate in cells and scavenge reactive oxygen species. Our findings could pave the way for using hydroxylated NDs as antioxidants to improve cellular stability in algae-based biotechnological applications or semi-artificial photosynthetic systems.