Aquaculture is one of the fastest-growing food production sectors globally, but its rapid expansion has led to several environmental concerns, notably the generation of nutrient-rich wastewater effluents. These waters, which mainly consist of uneaten feed, fecal matter, and metabolic by-products, contribute to the eutrophication of the nearby water bodies. Phycoremediation is an emerging and sustainable approach to mitigate the issue, in which microalgae absorb and transform excess nutrients from the wastewater. Different groups of microalgae, such as green algae, diatoms, and cyanobacteria, exhibit varying capacities of nutrient uptake. Their diverse growth and metabolic traits make them effectively utilize nitrate, phosphate, iron, silica, heavy metals, and other pollutants from the wastewater, and they can be effectively integrated into wastewater treatment in aquaculture systems. Moreover, the harvested algal biomass can be used for value-added products such as food, feed, nutraceuticals, fertilizers, and biofuels, promoting the circular bioeconomy. However, challenges exist, such as strain optimization, scaling up from laboratory to field, and efficient harvesting and processing techniques for the biomass. This chapter investigates the present status and the promise of phycoremediation in aquaculture by examining the nutrient assimilation and biomass production by various microalgal groups, the key challenges involved, and the future prospects.