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• Five Scenedesmus and three Desmodesmus species were isolated from Hexi Corridor. • Scenedesmus sp. HXY2 performed best to purify wastewater and produce lipid. • Desmodesmus sp. HXY7 was a potential source for lutein production. Screening for highly efficient microalgae is an important technique for improving treatment efficiency. In this study, eight species of microalgae (five Scenedesmus and three Desmodesmus) were isolated from water and soil in the Hexi Corridor region, China, and identified by 18S rRNA gene sequence analysis. Scenedesmus sp. HXY2 grew well under high total organic carbon and ammonia conditions and had the highest nutrient removal efficiency (>95%). On day 12, the biomass of Scenedesmus sp. HXY2 was 7.2 × 106 cells mL−1. The lipid content and productivity of this species were 15.56% and 5.67 mg L-1 day−1, respectively. The proportion of unsaturated fatty acids (60.07%) indicated that the lipids of Scenedesmus sp. HXY2 were suitable for biodiesel production. Scenedesmus sp. HXY2 showed great potential for growth in wastewater with high ammonia and organic contents to simultaneously purify wastewater and produce lipids. [ABSTRACT FROM AUTHOR]