Biodiesel has gained much attention in recent years due to its eco-friendly nature, non-toxic characteristics, biodegradability and lower net carbon cycle compared to conventional diesel fuels. In the current study, potential algal specie Cladophoragoensis 1 were collected from creaks of Navi Mumbai and employed as a feedstock for biodiesel production. Present review focuses on algal biofuels and their environmental sustainability. Microalgae are autotrophic microorganisms having extremely high photosynthetic efficiency and are valued as rich source of lipids, hydrocarbons, and other complex oils for biodiesel. This extracted oil was converted into biodiesel via transestrification process.