The leather industry remains a highly polluting sector among all other industries, as its operations involve extensive chemical use and substantial effluent generation. Tannery effluent can lead to major environmental impacts owing to elevated concentrations of heavy metals, chemical oxygen demand (COD), biochemical oxygen demand (BOD), and other contaminants such as nitrogen, phosphorus, dyes, and sulphur. Heavy metals like chromium, cadmium, zinc, and lead in tannery effluent are highly toxic, which disrupts aquatic life and poses a serious risk to human health through bioaccumulation in the food chain. Microalgal consortia-based biological treatment has emerged as a potential approach of harnessing synergistic interactions for nutrient uptake, heavy metal accumulation, and remediation. Furthermore, microalgae can reduce CO2 levels and reduce phosphate, nitrogen, COD, and BOD from tannery effluent to enhance the wastewater quality. However, challenges persist in scaling microalgal cultivation, optimizing industrial growth conditions, and ensuring economic feasibility. Further research is needed to assess the long-term stability and efficiency of microalgal consortia in varying wastewater compositions. This review critically evaluates the key trends, such as the increasing focus on consortia-based bioremediation over monoculture approaches, along with species-specific potential in pollutant removal and advancements in algal biomass valorization. Various potential consortia of microalgae species such as Chlorella sp., Phormidium sp., Scenedesmus sp., Leptolyngbya sp., Ochromonas sp., Chlamydomonas sp., Diplosphaera sp., and Ganoderma lucidum in providing effective and viable alternatives for tannery effluent treatment have been discussed.