Microalgae accumulate a considerable amount of lipids and carbohydrate under nutrient-deficient conditions, which makes them one of the promising sustainable resources for biofuel production. In the present study, to obtain the biomass with higher lipid and carbohydrate contents, we implemented a short-term nitrogen starvation of 1, 2, and 3 days in a green microalga Acutodesmus dimorphus. Few recent reports suggest that oxidative stress-tolerant microalgae are highly efficient for biofuel production. To study the role of oxidative stress due to nitrogen deficiency, responses of various stress biomarkers like reactive oxygen species (ROS), cellular enzymatic antioxidants superoxide dismutase (SOD), catalase (CAT), ascorbate peroxidase (APX), and non-enzymatic scavengers proline and polyphenols were also evaluated. Further, the endogenous levels of phytohormones abscisic acid (ABA) and indole-3-acetic acid (IAA) were also determined to study their response to nitrogen deficiency. We observed that nitrogen starvation of 2 days is effective to produce biomass containing 29.92% of lipid (comprising about 75% of neutral lipid) and 34.80% of carbohydrate, which is significantly higher (about 23 and 64%, respectively) than that of the control culture. Among all nitrogen-starved cultures, the accumulations of ROS were lower in 2 days starved culture, which can be linked with the several folds higher activities of SOD and CAT in this culture. The accumulations of proline and total polyphenols were also significantly higher (about 4.7- and 1.7-folds, respectively, than that of the control) in 2 days nitrogen-starved culture. The levels of phytohormones once decreased significantly after 1 day, increased continuously up to 3 days of nitrogen starvation. The findings of the present study highlight the interaction of nitrogen starvation-induced oxidative stress with the signaling involved in the growth and development of microalga. The study presents a comprehensive picture of the adaptive mechanisms of the cells from a physiological perspective along with providing the strategy to improve the biofuel potential of A. dimorphus through a short-term nitrogen starvation.