The rapid expansion of both the global economy and the human population has led to a shortage of water resources suitable for direct human consumption. As a result, water remediation will inexorably become the primary focus on a global scale. Microalgae can be grown in various types of wastewaters (WW). They have a high potential to remove contaminants from the effluents of industries and urban areas. This review focuses on recent advances on WW remediation through microalgae cultivation. Attention has already been paid to microalgae-based wastewater treatment (WWT) due to its low energy requirements, the strong ability of microalgae to thrive under diverse environmental conditions, and the potential to transform WW nutrients into high-value compounds. It turned out that microalgae-based WWT is an economical and sustainable solution. Moreover, different types of toxins are removed by microalgae through biosorption, bioaccumulation, and biodegradation processes. Examples are toxins from agricultural runoffs and textile and pharmaceutical industrial effluents. Microalgae have the potential to mitigate carbon dioxide and make use of the micronutrients that are present in the effluents. This review paper highlights the application of microalgae in WW remediation and the remediation of diverse types of pollutants commonly present in WW through different mechanisms, simultaneous resource recovery, and efficient microalgae-based co-culturing systems along with bottlenecks and prospects.