The dairy industry is a major consumer of water and producer of wastewater, with the increasing demand for dairy products leading to a rapid growth in production and consequently an increase in wastewater generation. Dairy effluent contains high levels of chemical oxygen demand, inorganic and organic particles, biological oxygen demand, and nutrients that contribute to eutrophication in water bodies, significantly impacting the ecosystem. Flocculation and coagulation processes are cost-effective methods commonly used as primary treatment for drinking water. Both organic and inorganic flocculants have long been utilized in wastewater treatment; however, due to health concerns associated with chemical flocculants, eco-friendly bioflocculants have become essential. Various microorganisms such as bacteria, algae, fungi, and actinomycetes are known producers of bioflocculants. Microbial flocculants find applications across industries including food and pharmaceutical industries such as viscosifying, emulsifying, and stabilizing agents, for the purification of potable water, and wastewater treatment. Moreover, bioflocculants have been used as biosorbents for removing all types of metallic pollutants from manufacturing wastes. These bioflocculants store sufficient amounts of carbohydrates and lipids in their cell walls that result in a number of environmental applications such as wastewater treatment, biofuels production, and CO2 sequestration. This study explores the production and application of bioflocculants—biological agents derived from microorganisms or plants—as an innovative approach to treat dairy wastewater while simultaneously recovering valuable by-products such as organic fertilizers, bioplastics, and biofuels.