The rapid pace of industrialization and urbanization resulting from global population growth, coupled with efforts to expand agricultural land to accommodate this population increase and the development of various transportation methods, have all exacerbated the risk of environmental pollution, making it one of the most serious global challenges. Traditional methods of treating polluted water are often costly and can produce secondary pollutants. In the ongoing search for environmentally friendly solutions, scientists have focused their attention on algae as a sustainable and eco-friendly option. Algae were chosen as a key organism in this field due to their high capacity for removing nutrients, heavy metals, and carbon dioxide (a major greenhouse gas) as well as their ability to decompose organic nutrients through biological processes such as biosorption, bioaccumulation, and biodegradation. This paper reviews the current role of algae in removing nutrients, heavy metals, and dyes from wastewater focusing on the methods and different species used in treatment over the last twenty years.