A techno-economic analysis (TEA) was performed to evaluate the technology, cost, and resource use for algal biofuel production based on today’s economics and technology. The basic goal of this study is to develop a model to calculate the mass and energy balances and costs to produce 10 million gal of lipid per year from microalgae. There are previous studies that estimate these parameters, but the detailed assumptions and calculations are not published. This analysis considers two algal growth pathways, e.g. open pond and photobioreactor (PBR) cultivation. This study demonstrated that large-scale PBRs costs are much more than open pond systems for the production of biofuel from algae. Lipid production costs are highly sensitive to the assumption of algae productivity and lipid content. Currently, the economics of producing biofuel from algae is not competitive with petroleum fuels. In future, several strategies can be performed for potential enhancement algal biofuel economics, includes the production of high value co-products from algae, integrating wastewater treatment, and improvement of algal biofuel technology.