In recent decades, the world has been confronted with an energy crisis associated with irreversible depletion of traditional sources of fossil fuels, coupled with atmospheric accumulation of greenhouse gases that cause global warming. The urgent need to replace traditional fuels led to emergence of biodiesel and biohydrogen as interesting alternatives, both of which can be obtained via microalga-mediated routes. Microalgae are ubiquitous eukaryotic microorganisms, characterized by a remarkable metabolic plasticity. Their oil productivities are much higher than those of higher terrestrial plants, and they do not require high quality agricultural land. Microalgae may indeed be cultivated in brackish and wastewaters that provide suitable nutrients (e.g. NH4+, NO3- and PO43-), at the expense of only sunlight and atmospheric CO2. On the other hand, metabolic engineering permits release of molecular hydrogen also via photosynthetic routes, which will easily be converted to electricity in fuel cells or mechanical power in explosion engines, with only water vapor as exhaust product in both cases. However, large-scale implementation of microalga-based systems to manufacture biodiesel and biohydrogen has been economically constrained by their still poor volumetric efficiencies, which imply excessively high costs when compared with current petrofuel prices. Technological improvements are accordingly critical, both on the biocatalyst and the bioreactor levels. The current bottlenecks that have apparently precluded full industrial exploitation of microalgae cells are critically discussed here, viz. those derived from the scarce knowledge on the mechanisms that control regulation of gene expression, the reduced number of species subjected to successful genetic transformation, the relatively low cell density attainable, the poor efficiency in harvesting, and the difficulties in light capture and use. Therefore, this paper provides an overview of the feasibility of microalgae for production of biofuels via synthesis of liquid endocellular metabolites (i.e. triglycerides) and gaseous extracellular ones (i.e. molecular hydrogen), and addresses technical and economic shortcomings and opportunities along the whole processing chain, at both microorganism and reactor levels. (c) 2012 Elsevier Ltd. All rights reserved.