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This study emphasises the significant role of various microalgal species in promoting environmental sustainability through their ability to treat Palm Oil Mill Effluent (POME) while enhancing biomass and biodiesel production. The microalgae strains, Nannochloropsis oculata, Chlorella vulgaris, Chlamydomonas biconvexa, Scenedesmus dimorphus, Spirulina platensis, and Tetraselmis suecica , were assessed for their POME treatment efficiency under diverse growth conditions. In flask cultures, N. oculata effectively reduced oil, grease, COD, BOD, TOC, and TN; while immobilized C. vulgaris showed significant reduction in COD, BOD, Fe(II), TN, TP, and Mn(II). S. dimorphus and S. platensis showed excellent pollutant removal in outdoor raceway ponds, whereas C. biconvexa effectively eliminated PO 4 and NH 4 +-N in photobioreactors. S. platensis and C. sorokiniana showed impressive growth rates and biomass production. Furthermore, cytochrome P450 monooxygenases in N. oculata and C. vulgaris provided a 70–90 % reduction in polyaromatic hydrocarbons (PAHs). Biodiesel potential was confirmed with Nannochloropsis sp. achieving lipid productivity of 362–600 mg/L−1d and a lipid content of 61.60 %, while Chlorella pyrenoidosa yielded 230 mg/L−1d and 68 % lipid content. FAME analysis highlighted Chaetoceros affinis with 74.6 % monounsaturated fatty acids (MUFA) and 72.3 % oleic acid (C18:1), while C. vulgaris exhibited a diverse FAME profile. These results demonstrate the dual capacity of microalgae in renewable energy production and wastewater treatment, showcasing their potential as a sustainable feedstock for biodiesel production from palm oil mills effluents. • Effective removal of contaminants from Palm Oil Mill Effluents (POME) using microalgae Nannochloropsis sp. and Chlorella sp. • Nannochloropsis sp., absorbs and enzymatically degrades PAHs from POME. • Microalgae produce cytochrome P450 monooxygenases to degrade PAHs into simpler hydroxylated molecules in treated POME. • Phycoremediation enhances Chlorella sp. biomass from POME treatment, promoting lipid accumulation for biofuel production. [ABSTRACT FROM AUTHOR]