Modern society is fueled by fossil energy produced millions of years ago by photosynthetic organisms. Cultivating contemporary photosynthetic producers to generate energy and capture carbon from the atmosphere is one potential approach to sustaining society without disrupting the climate. Algae, photosynthetic aquatic microorganisms, are the fastest growing primary producers in the world and can therefore produce more energy with less land, water, and nutrients than terrestrial plant crops. We review recent progress and challenges in developing bioenergy technology based on algae. A variety of high-value products in addition to biofuels can be harvested from algal biomass, and these may be key to developing algal biotechnology and realizing the commercial potential of these organisms. Aspects of algal biology that differentiate them from plants demand an integrative approach based on genetics, cell biology, ecology, and evolution. We call for a systems approach to research on algal biotechnology rooted in understanding their biology, from the level of genes to ecosystems, and integrating perspectives from physical, chemical, and social sciences to solve one of the most critical outstanding technological problems.