Microalgae, photosynthetic organisms that flourish in many aquatic habitats and are rich in vital nutrients, making them a valuable resource for humans and animals, have gained growing interest for their potential to transform into food production. Despite their microscopic size, microalgae are packed with essential nutrients like protein, vitamins, and antioxidants, offering a concentrated source of nutrition. This review aims to explore the nutritional, functional, and commercial potential of microalgae in food applications, focusing on their role in the development of food supplements and novel food formulations. Over recent decades, microalgae have been steadily introduced into the food industry and have seen modest expansion. Due to their high content of beneficial fatty acids (linoleic acid, gamma-linolenic acid, and arachidonic acid), carotenoids, vitamins, phycobilin pigments, highly digestible proteins, lipids, and carbohydrates, microalgae are becoming recognised for their sustainable valorization potential. This review highlights key microalgal species generally recognized as safe (GRAS) and their integration into functional foods. It also discusses emerging trends and biotechnological advancements in microalgae-based food products, underscoring their potential to address global nutritional and sustainability challenges.