Nutrient-rich wastewater may provide a sustainable means to cultivate microalgal biomass for biofuel use, yet many microalgal strains are very sensitive to wastewater due to toxicity caused by abiotic and biotic stresses. Naturally adapted strains that can efficiently grow in wastewater effluent are therefore of interest, however, the mechanisms by which such strains tolerate wastewater conditions are unknown. This study isolated indigenous chlorophyte microalgae strains from a municipal secondary wastewater effluent tank. The strains were identified by molecular phylogenetics and characterised by their ability to utilise exogenous organic carbon sources for mixotrophic growth and on the basis of oxidative stress tolerance, in order to elucidate the mechanisms of wastewater adaptation. Two of the strains, identified as Chlorella luteoviridis and Parachlorella hussii, could grow very well in raw wastewater due to their substantial tolerance to oxidative stress, which is highly induced by the wastewater environment. These strains exhibited high ascorbate peroxidase activity allowing increased scavenging of reactive oxygen species compared to strains that are not well adapted to the wastewater conditions. Both strains displayed high biomass and lipid productivity values in wastewater effluent. The accumulated lipids were suitable for biodiesel usage with characteristics equivalent to palm oil- and sunflower oil-derived biodiesel. The strains were also efficient in nutrient remediation from the wastewater. These results demonstrate the potential of these two strains for future biofuel applications coupled to wastewater remediation and highlight the importance of oxidative stress tolerance as a key indicator of efficient wastewater growth. (C) 2013 Elsevier Ltd. All rights reserved.