Depletion of fossil fuel sources and their emissions have triggered a vigorous research in finding alter- native and renewable energy sources. In this regard, algae are being exploited as a third generation feedstock for the production of biofuels such as bioethanol, biodiesel, biogas, and biohydrogen. However, algal based biofuel does not reach successful peak due to the higher cost issues in cultivation, harvesting and extraction steps. Therefore, this review presents an extensive detail of deriving biofuels from algal biomass starting from various algae cultivation systems like raceway pond and photobioreactors and its bottlenecks. Evolution of biofuel feedstocks from edible oils to algae have been addressed in the initial section of the manuscript to provide insights on the different generation of biofuel. Different configu- ration of photobioreactor systems used to reduce contamination risk and improve biomass productivity were extensively discussed. Photobioreactor performance greatly relies on the conditions under which it is operated. Hence, the importance of such conditions alike temperature, light intensity, inoculum size, CO2, nutrient concentration, and mixing in bioreactor performance have been described. As the lipid is the main component in biodiesel production, several pretreatment methods such as physical, chemical and biological for disrupting cell membrane to extract lipid were comprehensively reviewed and pre- sented. This review article had put forth the recent advancement in the pretreatment methods like hydrothermal processing of algal biomasses using acid or alkali. Eventually, challenges and future di- mensions in algal cultivation and pretreatment process were discussed in detail for making an economically viable algal biofuel.