Phenolic compounds, which are present in considerable amounts in industrial wastewater, are toxic, even at low concentrations. Most bacteria used in conventional treatment methods for the removal of phenolics are pathogenic, and their biomass does not have an evident commercial value. We evaluated the usability of microalgae for the removal of phenolic compounds from simulated wastewater and as a sustainable oil source for biodiesel production with the aim to render microalgae cultivation more economically attractive. Freshwater and marine microalgae species, Chlorella sp. and Tetraselmis sp., were used to remove phenol, 4-nitrophenol, and 2,4-dinitrophenol, which are commonly found in refinery wastewater. The effect of initial phenolics concentrations on biomass growth and phenolics removal was evaluated and kinetics models were developed to describe the systems. Freshwater Chlorella sp. was grown in a pilot-scale open pond with optimum phenolics concentrations, and oil extracted from the harvested biomass was used to produce biodiesel using an in-house heterogeneous alkaline catalyst. The effects of catalyst amount, methanol:oil molar ratio, and reaction temperature on biodiesel production were determined after 4 h of reaction. The experimental data were used to determine the kinetics parameters of the reaction, and to develop a second-order interactive model that was used to determine the significance of the above parameters and to optimize the process. The optimum conditions were found to be a catalyst wt% of 7.7, methanol:oil molar ratio of 12, and temperature of 45 °C, at which the biodiesel after 4 h was 30.4%.