Urbanization, industrialization, and natural earth processes have potentially increased the contamination of heavy metals (HMs) in water bodies. These HMs can accumulate in human beings through the consumption of contaminated water and food chains. Various clean-up technologies have been applied to sequester HMs, especially conventional methods including electrolytic technologies, ion exchange, precipitation, chemical extraction, hydrolysis, polymer micro-encapsulation, and leaching. However, most of these approaches are expensive for large-scale projects and require tedious control and constant monitoring, along with low efficiency for effective HMs removal. Algae offer an alternative, sustainable, and environmentally friendly HMs remediation approach. This review presents a state-of-the-art technology for potential use of algae as a low-cost biosorbent for the removal of HMs from wastewater. The mechanisms of HMs removal, including biosorption and bioaccumulation along with physical and chemical characterization of the algae are highlighted. The influence of abiotic factors on HMs removal and changes in algal biocomponents (including, carbohydrate, lipid, and protein) are discussed. Recent progresses made in the development of HMs-tolerant algal strains and the direction of future research toward the development of sustainable technology for advanced wastewater treatment and biomass production are covered.