An extensive range of pigments including phycobiliproteins are present in algae. C-phycocyanin (C-PC), a phycobiliprotein, is one of the key pigments of Spirulina, a microalgae used in many countries as a dietary supplement. Algal pigments have massive commercial value as natural colorants in nutraceutical, cosmetics, and pharmaceutical industries, besides their health benefits. At present, increasing awareness of harmful effects of synthetic compounds and inclination of community towards the usage of natural products have led to the exploitation of microalgae as a source of natural pigments/colors. This review describes recent findings about the sources and production of C-PC, with emphasis on specific techniques for extraction and purification, along with potential industrial applications in diagnostics, foods, cosmetics, and pharmaceutical industries.