AbstractCocoa butter equivalents (CBE) are usually produced using exotic butters or tropical fats from illipe, palm mid‐fraction, sal, shea, kokum, and mango kernel. These exotic butters are often harvested from the wild trees, their supply is limited, and their quality can be varied. In this study, we report on the physicochemical and functional properties of two new CBE made from algal butter, and compared them to those of a commercial shea stearin (cSS). The functionality of these fats as CBE in a model chocolate system was assessed and compared to a cocoa butter (CB) control. The fatty‐acid composition and the triacylglycerol profile of algal butters were similar to cSS. The crystallization temperature, melting point, and crystal polymorphic form (β2 3‐L) of the algal butters were similar to those of cSS. No significant differences (P <0.05) in hardness and bloom formation were observed. One‐year storage at room temperature caused bloom formation in all chocolates, as evidenced from a βV to βVI polymorphic transformation, except for 100% algal butters and cSS. According to the results of this study, algal butter is compatible with CB and can be used as a novel CBE in chocolate products.