Global warming caused by carbon dioxide (CO2) emissions is one of the most important topics of concern in the fields of science, environment and global economy. Carbon dioxide emissions have increased dramatically in recent years, and this trend is likely to continue with a projected increase of both global energy consumption and CO2 emissions by 51% in 2050 compared with 2005. To mitigate the negative impacts arising, a potential strategy to convert CO2 into renewable fuels or valuable chemicals can be applied. Bio‐CO2 emission reduction is receiving more and more attention as an environmentally friendly method. Microalgae are attracting worldwide attention in this regard owing to their exceptional speed of growth, resistance to harsh environments and low production costs. In this review, the biochemical principles of microalgae‐CO2 fixation and the research progress of microalgae strains used for CO2 fixation are reviewed and discussed. The latest progress in the co‐development of a microalgae carbon sequestration industry and other industries are provided, along with a survey of the progress in methods to improve microalgae‐CO2 fixation. Finally, the problems to be solved in the industry and its future directions of development are clarified. © 2021 Society of Chemical Industry (SCI).