The production of photosynthetic biofuels using microalgae is a promising strategy to combat the use of non-renewable energy sources. The microalgae residual biomass is a waste by-product of biofuel production; however, it could prove to have utility in the development of sustainable nutraceuticals and functional foods. In this study, a comprehensive characterisation of the under-utilised Phaeodactylum tricornutum microalgae residual biomass is presented. Proximal composition, antioxidant capacity (using three different antioxidant assays; oxygen radical absorbance capacity; radical cation activity, ABTS; and radical scavenging activity, DPPH), and total phenolic content of free and bound polyphenols were determined. Additionally, the physicochemical properties of water activity, pH, water absorption index, water solubility index, and dispersibility were evaluated. Results revealed that P. tricornutum microalgae residual biomass exhibits a relatively high protein and carbohydrate content, with values of 36.67% and 46.78%, respectively; and most carbohydrates were found as total dietary fibre (45.57%), of which insoluble dietary fibre was the most predominant (43.54%). Antioxidant capacity values for total phytochemicals of 106.22, 67.93, 9.54 µM TE g dw were determined by oxygen radical absorbance capacity, ABTS, and DPPH assays, respectively. Total phenolic content was found to be 2.90 mg GAE g dw. Interestingly, antioxidant capacity and total phenolic content were higher in bound than in free phytochemical extracts. The physicochemical analysis showed P. tricornutum microalgae residual biomass to have suitable properties for the generation of a beverage with Aw, pH, water absorption index, water solubility index, and dispersibility values of 0.45, 7.12, 3.40 g gel g dw, 2.5 g solids 100 g dw, and 90%, respectively. Hence, P. tricornutum microalgae residual biomass could be considered a potential source of bioactive compounds suitable for the production of functional food exhibiting antioxidant capacity and high dietary fibre content.