Algal biomass is an excellent renewable resource for the production of polymers and other products due to their higher growth rate, high photosynthetic efficiency, great potential for carbon dioxide fixation, low percentage of lignin and high amount of carbohydrates. Algae contain unique metabolites which are transformed into monomers suitable for development of novel polyesters. This review article mainly focuses on algal bio-refinery concept for polyester synthesis and on exploitation of algae-based biodegradable polyester blends and composites in tissue engineering and controlled drug delivery system. Algae-derived hybrid polyester scaffolds are extensively used for bone, cartilage, cardiac and nerve tissue regeneration due to their biocompatibility and tunable biodegradability. Microcapsules and microspheres of algae-derived polyesters have been used for controlled and continuous release of several pharmaceutical agents and macromolecules to produce humoral and cellular immunity with efficient intracellular delivery.