Algae are among the most potentially significant sources of sustainable biofuels in the future of renewable energy. A feedstock with virtually unlimited applicability, algae can metabolize various waste streams (e.g., municipal wastewater, carbon dioxide from industrial flue gas) and produce products with a wide variety of compositions and uses. These products include lipids, which can be processed into biodiesel; carbohydrates, which can be processed into ethanol; and proteins, which can be used for human and animal consumption. Algae are commonly genetically engineered to allow for advantageous process modification or optimization. However, issues remain regarding human exposure to algae-derived toxins, allergens, and carcinogens from both existing and genetically modified organisms (GMOs), as well as the overall environmental impact of GMOs. A literature review was performed to highlight issues related to the growth and use of algal products for generating biofuels. Human exposure and environmental impact issues are identified and discussed, as well as current research and development activities of academic, commercial, and governmental groups. It is hoped that the ideas contained in this paper will increase environmental awareness of issues surrounding the production of algae and will help the algae industry develop to its full potential.