The emergence of algal biorefineries has garnered considerable attention to researchers owing to their potential to ensure carbon neutrality via mitigation of atmospheric greenhouse gases. Algae-derived biofuels, characterized by their carbon-neutral nature, stand poised to play a pivotal role in advancing sustainable development initiatives aimed at enhancing environmental and societal well-being. In this context, algae-based wastewater treatment systems are greatly appreciated for their efficacy in nutrient removal and simultaneous bioenergy generation. These systems leverage the growth of algae species on wastewater nutrients—including carbon, nitrogen, and phosphorus—alongside carbon dioxide, thus facilitating a multifaceted approach to pollution remediation. This review seeks to delve into the realization of carbon neutrality through algae-mediated wastewater treatment approaches. Through a comprehensive analysis, this review scrutinizes the trajectory of algae-based wastewater treatment via bibliometric analysis. It subsequently examines the case studies and empirical insights pertaining to algae cultivation, treatment performance analysis, cost and life cycle analyses, and the implementation of optimization methodologies rooted in artificial intelligence and machine learning algorithms for algae-based wastewater treatment systems. By synthesizing these diverse perspectives, this study aims to offer valuable insights for the development of future engineering applications predicated on an in-depth understanding of carbon neutrality within the framework of circular economy paradigms