Microalgae, nature’s diminutive photosynthetic powerhouses, emerge as revolutionary sources of bioactive compounds spanning food, pharmaceuticals, and nutraceuticals. Traditionally, extraction was inefficient and environmentally problematic. This chapter introduces the algal biorefinery paradigm, a holistic approach valorizing every algae biomass component, maximizing utilization, and minimizing waste. We explore diverse bioactive compounds like pigments, antioxidants, polysaccharides, and omega-3 fatty acids. This review optimizes algal cultivation, emphasizing strains rich in bioactive compounds. Advanced extraction techniques—ultrasound-assisted, pressurized liquid, and supercritical fluid extraction—prioritize selectivity, efficiency, and sustainability. The biorefinery extends beyond bioactive compound extraction, integrating biofuel production, energy generation, and residual biomass recovery for fertilizers or animal feed, minimizing waste, and maximizing value. Challenges and prospects in scaling up algal biorefinery operations are addressed. Bioprospecting novel algal strains, optimizing cultivation and harvesting, and advancing downstream processing are emphasized. The algal biorefinery promises a sustainable treasure trove of bioactive compounds, contributing to a circular bioeconomy. This chapter paints a transformative technology picture, paving the way for an algae-powered future.