Abstract Electricity generation from biomass has captured a lot of attention these days. Many countries have inclined to start large-scale research projects so that the microbial fuel cells could be installed to fulfill the power requirements of domestic as well as industrial sectors. The chemical energy stored in the algal biomass can be harnessed for sustainable production of fuels and other value-added products. Bioelectricity production using algae seems to be a wise approach to extract energy from sunlight in an economic and sustainable manner. It is achieved through integration of photosynthesis with microbial fuel cell (MFC). Algae have been used commonly in MFCs to reduce oxygen at cathode or as a substrate for bacteria. However, sufficient electric current can also be generated at anode, where cytochromes help indirect shuttling of electrons generated in photosystem II of the algal cells and can be called as photosynthetic algal microbial fuel cell (PAMFC). Despite being environmental friendly, low efficiency makes these neoteric systems unviable. Hence, a good understanding is needed for the bioelectrochemical mechanisms working behind the electron transfer from algae to electrode. Oxygen is also a limiting factor among different variables viz. pH, substrate loading rate etc., affecting the fuel cell performance. The present review addresses the mechanism of electron transfer in algae and algae to electrode and the factors affecting the performance of PAMFC.