© 2020 Elsevier LtdThe major hurdles causing difficulties in mechanized transportation are the depletion of fossil fuels and the high cost of alternative plant-based substrates for producing biofuels. To solve these issues, biofuels were emerged as effective alternatives to reduce pollution caused by the emission of greenhouse gases. Among biofuels, biobutanol is gaining attention as a feasible, renewable, cost-effective, alternative fuel. But the usages of conventional agricultural crops as feedstock are sensitive and controversial due to the growing concern over the availability of food worldwide. Microalgae are an excellent resource to overcome these challenges, which grows on both the sea and freshwater. Microalgae reducing their land usage with agriculture, and there is no food and fuel conflict exist. In addition, microalgae utilize inorganic carbon from the atmosphere for growth; hence they can reduce the emission levels as well as produce clean energy. Therefore, microalgae as third-generation feedstock came into practice due to their fast growth rate and higher carbohydrate content. The main focus of the present review is to discuss in detail about the major challenges faced as a feedstock, genetic engineering strategies adopted and future perspectives to improve the production of biobutanol from microalgae.