Diatoms are abundant unicellular marine photosynthetic algae that have genetically diversified their physiology and metabolism while adapting to numerous environments. The metabolic repertoire of diatoms presents opportunities to characterise the biosynthesis and production of new and potentially valuable microalgal compounds, including sterols. Sterols of plant origin, known as phytosterols, have been studied for health benefits including demonstrated cholesterol-lowering properties. In this review we summarise sterol diversity, the unique metabolic features of sterol biosynthesis in diatoms, and prospects for the extraction of diatom phytosterols in comparison to existing sources. We also review biotechnological efforts to manipulate diatom biosynthesis, including culture conditions and avenues for the rational engineering of metabolism and cellular regulation.