This study aims to enhance lipid and biofuel productivity from Chlorella minutissima with hematite (α-Fe2O3) nanoparticles (IONPs) as a growth stimulant. The IONPs were synthesized using chemical method and characterized using X-ray diffraction (XRD), Scanning Electron Microscopy (SEM), and Energy Dispersive X-ray (EDX) analysis to confirm their structure and composition. The experimental setup involved inoculating various concentrations of IONPs (10, 20, and 30 mg·L−1) into the microalgal BG-11 growth medium to evaluate their impact on microalgal growth and biodiesel production. Results of this study showed that a concentration of 10 mg·L−1 of IONPs significantly increased the biomass concentration to 508.1 mg·L−1 over a 20-day cultivation period, achieving the highest biomass production rate of 31.7 mg·L−1·d−1 at this concentration. The lipid extracted from the microalgal biomass was subsequently transesterified into biodiesel. Key biodiesel properties, such as cetane number, calorific value, density, and viscosity, were measured to assess fuel quality. The findings demonstrate that incorporating hematite nanoparticles into the microalgal growth medium can significantly boost both lipid content and overall growth, thereby improving biodiesel production. This study suggests that the use of α-Fe2O3 nanoparticles presents a promising approach for scalable and sustainable biofuel production from microalgae.