Microalgal biofuel research in China has made noticeable progress, and algae cultivation for biofuel production is considered to be an important contribution to Greenhouse Gas (GHG) mitigation and energy security. In this paper, the algal biofuel potentiality in China was reviewed from the points of view of algal biodiversity, algal culture collection, GHGs (especially CO2) mitigation, and the availability of the required sunlight, wastewater and land resources. The cultivation of microalgae utilizing power plants gas with large amounts of CO2 and wastewaters from urban households, industry and animal husbandry are suitable for large scale production in China. Land is hardly a limitation for algae cultivation.