Current trends in the application of nanomaterials are emerging in the nano-biotechnological sector for development of medicines. Cyanobacteria (blue-green algae) are photosynthetic prokaryotes that have applications to human health and numerous biological activities as dietary supplements. Cyanobacteria produce biologically active and chemically diverse compounds such as cyclic peptides, lipopeptides, fatty acid amides, alkaloids, and saccharides. More than 50% of marine cyanobacteria are potentially exploitable for the extraction of bioactive substances, which are effective in killing cancer cells by inducing apoptotic death. The current review emphasizes that not even 10% of microalgal bioactive components have reached commercialized platforms due to difficulties related to solubility. Considering these factors, they should be considered as a potential source of natural products for drug discovery and drug delivery approaches. Nanoformulations employing a wide variety of nanoparticles and their polymerized forms could be an emerging approach to the development of new cancer drugs. This review highlights recent research on microalgae-based medicines or compounds as well as their biomedical applications. This review further discusses the facts, limitations, and commercial market trends related to the use of microalgae for industrial and medicinal purposes.