Improving the economic feasibility is necessary for algae-based processes to achieve commercial scales for biofuels and bioproducts production. A closed-loop system for fusel alcohol production from microalgae biomass with integrated nutrient recycling was developed, which enables the reuse of nitrogen and phosphorus for downstream application and thus reduces the operational requirement for external major nutrients. Mixed fusel alcohols, primarily isobutanol and isopentanol were produced from Microchloropsis salina hydrolysates by an engineered E. coli co-culture. During the process, cellular nitrogen from microalgae biomass was converted into ammonium, whereas cellular phosphorus was liberated by an osmotic shock treatment. The formation of struvite from the liberated ammonium and phosphate, and the subsequent utilization of struvite to support M. salina cultivation was demonstrated. The closed loop system established here should help overcome one of the identified economic barriers to scale-up of microalgae production, and enhance the sustainability of microalgae-based chemical commodities production.