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As nanotechnology is expanding to several commercial fields, there is a need of ecofriendly and energy-efficient methods for the synthesis of nanoparticles. Algae have been discovered to reduce metal ions and subsequently for the biosynthesis of nanoparticles. Since algae-mediated biosynthesis of nanoparticles is an ecofriendly, economical, high-yielding, expeditious and energy-efficient method, a large number of studies have been published in the last few years. This review article therefore is focused on recent progress on the utilization of algae of various classes, viz., Cyanophyceae, Chlorophyceae, Phaeophyceae, Rhodophyceae, etc. for the synthesis of nanoparticles, their characterization and the possible mechanisms involved.