Extensive anthropogenic activity has led to the accumulation of organic and inorganic contaminants in diverse ecosystems, which presents significant challenges for the environment and its inhabitants. Utilizing microalgae as a bioremediation tool can present a potential solution to these challenges. Microalgae have gained significant attention as a promising biotechnological solution for detoxifying environmental pollutants. This is due to their advantages, such as rapid growth rate, cost-effectiveness, high oil-rich biomass production, and ease of implementation. Moreover, microalgae-based remediation is more environmentally sustainable for not generating additional waste sludge, capturing atmospheric CO, and being efficient for nutrient recycling and sustainable algal biomass production for biofuels and high-value-added products generation. Hence, microalgae can achieve sustainability's three main pillars (environmental, economic, and social). Microalgal biomass can mediate contaminated wastewater effectively through accumulation, adsorption, and metabolism. These mechanisms enable the microalgae to reduce the concentration of heavy metals and organic contaminants to levels that are considered non-toxic. However, several factors, such as microalgal strain, cultivation technique, and the type of pollutants, limit the understanding of the microalgal removal mechanism and efficiency. Furthermore, adopting novel technological advancements (e.g., nanotechnology) may serve as a viable approach to address the challenge of refractory pollutants and bioremediation process sustainability. Therefore, this review discusses the mechanism and the ability of different microalgal species to mitigate persistent refractory pollutants, such as industrial effluents, dyes, pesticides, and pharmaceuticals. Also, this review paper provided insight into the production of nanomaterials, nanoparticles, and nanoparticle-based biosensors from microalgae and the immobilization of microalgae on nanomaterials to enhance bioremediation process efficiency. This review may open a new avenue for future advancing research regarding a sustainable biodegradation process of refractory pollutants.