<p>Recent global policies on curbing the usage of fossil fuels have made researchers look for alternative fuels, especially biofuels. This review provides insight into the hydrothermal processing (HP) of microalgae and a comparison of the three techniques, namely hydrothermal liquefaction (HTL), hydrothermal carbonization (HTC), and hydrothermal gasification (HTG), in terms of mechanism and product generation. HP is widely considered as its application is beneficial in several ways, employing wet biomass, having higher efficiency than other thermochemical conversion techniques and being eco-friendly. By a combination of various research studies, the chemistry involved in sustainable algal biofuel production via HP has been discussed, highlighting its merits and demerits. Furthermore, the knowledge gaps and research hotspots in the technologies in terms of product yield and quality are also identified. The presence of heteroatoms like sulfur and nitrogen is one of the key challenges in HTL oils. Consistent availability of feedstock, designing pilot-scale reactors and managing economics are some key considerations that needs to be addressed. While catalyst enhance the quality and yield of algal biofuels, synthesizing efficient, reusable as well as feedstock-flexible catalysts is a hurdle. Moreover, the process efficiency and energy consumption of the HP technology is also critical for improving the quantitative and qualitative parameters. In order to address the food-water-energy supply chains, process optimization and integration of technologies incorporating machine learning tools for process optimization would enhance efficiency while reducing energy consumption and environmental implications. The key contribution of this review is informative fostering the commercialization of sustainable algal biorefinery.</p> Graphical abstract <p></p>