Microalgae are valuable nutraceutical sources because of their nutrient-rich profiles and diverse bioactive compounds. This review provides a comprehensive analysis of marine and freshwater microalgae, emphasizing their species diversity, nutrient composition, and methods used for their extraction and processing. The health benefits of microalgal-based nutraceuticals have been explored, with evidence highlighting their role in managing diabetes, cancer, oxidative stress, inflammation, and obesity. Additionally, the sustainability and environmental benefits of marine and freshwater microalgal cultivation are discussed. The market potential for these nutraceuticals has been explored, underpinned by recent advancements in biotechnology, nanotechnology, and omics approaches. Despite their promising potential, challenges such as extraction efficiency, purification processes, and production scalability currently limit the widespread application of microalgae in nutraceuticals. However, recent advancements in biotechnology and omics approaches are driving innovations, addressing these limitations, and unlocking new possibilities. Furthermore, ongoing research and technological innovations suggest a bright future for the integration of marine microalgae into the nutraceutical industry, promoting both human health and environmental sustainability. This review also evaluates the growing market potential and economic viability of microalgal-based nutraceuticals, highlighting their growing demand and economic viability and providing a comprehensive understanding of the benefits, market potential, and technological advancements of marine and freshwater microalgae, fostering further innovation in this promising field.