Algal extracts have gained a lot of attention in the last decades due to their potential applications in different areas. Bioactive compounds produced by red, green, and brown algae are excellent sources of proteins, lipids, vitamins, and carbohydrates. In foods, such extra nutritional chemical components are present which are less in quantity. In algal chemistry, the pharmacological properties of bioactive compounds like alkaloids, carotenoids, and polyphenols have attracted researchers to develop drugs. These naturally occurring bioactive compounds are rich in antimicrobial properties with anticancer, antifungal, antiviral, anti-inflammatory, and antibacterial activities. In the production of natural chemical compounds, primary and secondary metabolism performs a vital role. Oxidative stress in algal cells induces the production of antioxidants to guard photosynthetic cells. Algae can be used as a source of various chemicals for cosmetics and pharmaceutical industries, biofuel production, feed for animals, and manure for soil health. Antimicrobial resistance and diminishing efficacy of antibiotics indicate towards more research for sources of antibiotics to combat such menaces. Microalgae are some of the sources that demonstrated such properties with a lot of unexplored potential. This study has the consolidation of recent studies and research which reveal the immense competence of algae to produce various novel compounds. It covers applications of bioactive compounds, their properties, biosynthesis, extraction techniques, and their advancement.