Microalgae are a diverse group of photosynthetic microorganisms that can be exploited to produce sustainable food and feed products, alleviate environmental pollution, or sequester CO2 to mitigate climate change, among other uses. To optimize resource use and integrate industrial waste streams, it is essential to consider factors such as the biology and cultivation parameters of the microalgal strains, as well as the cultivation system and processing technologies employed. This paper reviews the main commercial applications of microalgae (including cyanobacteria) and examines the biological and biotechnological aspects critical to the sustainable processing of microalgal biomass and its derived compounds. We also provide an up-to-date overview of the microalgal sector in Europe considering the strain, cultivation system and commercial application. We have identified 146 different microalgal-derived products from 66 European microalgae producers, and 49 additional companies that provide services and technologies, such as optimization and scalability of the microalgal production. The most widely cultivated microalga is ‘spirulina’ (Limnospira spp.), followed by Chlorella spp. and Nannochloropsis spp., mainly for human consumption and cosmetics. The preferred cultivation system in Europe is the photobioreactor. Finally, we discuss the logistic and regulatory challenges of producing microalgae at industrial scale, particularly in the European Union, and explore the potential of new genomic techniques and bioprocessing to foster a sustainable bioeconomy in the microalgal sector.