In this study, the freshwater microalgae Selenastrum sp. was assessed for the effective degradation of pyrene and simultaneous production of biodiesel from pyrene-tolerant biomass. The growth of algae was determined based on the cell dry weight, cell density, chlorophyll content, and biomass productivity under different pyrene concentrations. Further, lipids from pyrene tolerant culture were converted into biodiesel by acid-catalyzed transesterification, which was characterized for the total fatty acid profile by gas chromatography. Increased pyrene concentration revealed less biomass yield and productivity after 20 days of treatment, indicating potent pyrene biodegradation by Selenastrum sp. Biomass yield was unaffected till the 20 mg/L pyrene. A 95% of pyrene bioremediation was observed at 20 days of culturing. Lipid accumulation of 22.14%, as evident from the estimation of the total lipid content, indicated a marginal increase in corroborating pyrene stress in the culture. Fatty acid methyl esters yield of 63.06% (% per 100 g lipids) was noticed from the pyrene tolerant culture. Moreover, fatty acid profile analysis of biodiesel produced under 10 mg/L and 20 mg/L pyrene condition showed escalated levels of desirable fatty acids in Selenastrum sp., compared to the control. Further, Selenastrum sp. and other freshwater microalgae are catalogued for sustainable development goals attainment by 2030, as per the UNSDG (United Nations Sustainable Development Goals) agenda. Critical applications for the Selenastrum sp. in bioremediation of pyrene, along with biodiesel production, are enumerated for sustainable and renewable energy production and resource management.