The microalga was isolated from Muktsar, the southwestern zone of Indian Punjab and identified as Asterarcys quadricellulare BGLR5 (MF661929) by 18S rRNA sequence analysis. The optimization of various cultural factors by the Plackett-Burman and central composite (CCD) designs helped in discerning the significant cultural factors for the increased production of biomass and other functional components (chlorophyll, carbohydrate, lipid and protein). The optimal cultural conditions as per the model were pH 9.9, 81 μmol m-2 s-1 light intensity, 22 °C temperature, growth period of 25 days, NaNO3 12 mM, 15 mM NH4Cl, and 7 mM K2HPO4. In comparison to the basal condition biomass (0.886 g L-1), a 0.42-fold increase in biomass yield was attained. Further, the highest yield of biogas (P: 361.81 mL g-1 VS) with enhanced biogas production rate (R m: 8.19 mL g-1 day-1) was achieved in co-digesting paddy straw with Asterarcys quadricellulare biomass in 1:1 ratio compared to their digestion individually. Further, the co-digestion resulted in the positive synergistic effect which increased the observed biogas yield compared to the estimated yield by 11-58% depending upon the amount of algal biomass and paddy straw used. Hence, the present study signifies that the biomass of Asterarcys quadricellulare BGLR5 can be utilized as a co-substrate with paddy straw to enhance the biogas yield.The online version contains supplementary material available at 10.1007/s13205-021-02792-x.