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As a result of the global fuel crisis of the early 1970s, coupled with concerns for the environment, the use of biofuel has been on the increase in many regions throughout the world. At present, a total of approximately 30 billion (30×10⁹) liters of biofuel are utilized worldwide annually, although most countries rely hugely on the first generation biofuel. The limitations of the first and second generation biofuel gave rise to current interest in algae as a promising alternative to these conventional biofuel sources. Algal biomass could provide a lion׳s share of the global transport fuel requirements in future. The present review highlights some important developments in, and potentials of algaculture as a major biomass resource of the future. However, the major constraint to commercial-scale algae farming for energy production is the cost factor, which must be addressed adequately before its potentials can be harnessed.