Energy security, increasing oil prices, fossil resource depletion, and climate change are some of the greatest challenges faced by mankind at present. Third-generation biofuel feedstock and micro-and macroalgae have many advantages over the first and second generations of biofuels. In addition, defatted algae can also be used as a feedstock for production of hydrocarbons. Thermochemical methods are more efficient than any other routes for conversion of algae. Among thermochemical methods, hydrothermal upgradation is the most promising because it can process feedstock such as algae with very high moisture content. Various reactors, catalysts, and operating parameters have been tested to valorize algae by liquefaction and gasification, and promising results have been obtained. Breakthroughs in reactors and/or catalysts for hydrothermal upgradation, proper utilization of the side products obtained, and integration with various other methods to extract high-value hydrocarbons/products from algae would help make algal biorefinery economical and sustainable.