Oleaginous microalga Nannochloropsis sp. was immobilized in alginate gel beads and cultivated under optimal conditions that their growth and lipid production were comparable to those of free cells. The immobilized cells were used in phytoremediation of secondary effluent from palm oil mill and easily recovered by simple sieving method. The immobilized cells contributed to removal of nitrogen and phosphorus >90% and CO2 mitigation >99%. They also gave the biomass and lipid production of 1.300 +/- 0.050 g/L and 0.356 +/- 0.097 g/L, respectively. The repeated-batch cultivation improved the biomass and lipid production by 2.66 folds and 1.41 folds, respectively. The scale up in 3 L-fluidized bed photobioreactor gave the maximum biomass of 3.280 +/- 0.049 g/L and lipid production of 0.362 +/- 0.010 g/L. Fatty acid compositions of Nannochloropsis sp. lipids showed their suitability as biodiesel feedstocks. This system not only contributes as tertiary treatment of industrial effluent and CO2 mitigation but also low-cost production of renewable energy. (C) 2017 Elsevier Ltd. All rights reserved.