Increasing energy demand, limited fossil fuel resources and climate change have prompted development of alternative sustainable and economical fuel resources such as crop-based bio-ethanol and bio-diesel. However, there is concern over use of arable land that is used for food agriculture for creation of biofuel. Thus, there is a renewed interest in the use of microbes particularly microalgae for bio-fuel production. Microbes such as micro-algae and cyanobacteria that are used for biofuel production also produce other bioactive compounds under stressed conditions. Microbial agents used for biofuel production also produce bioactive compounds with antimicrobial, antiviral, anticoagulant, antioxidant, antifungal, anti-inflammatory and anticancer activity. Because of importance of such high-value compounds in aquaculture and bioremediation, and the potential to reduce carbon emissions and energy security, the biofuels produced by microbial biotechnology might substitute the crop-based bio-ethanol and bio-diesel production.