A critical mass of knowledge is emerging on the interactions between plant cells and engineered nanomaterials, revealing the potential of plant nanobiotechnology to promote and support novel solutions for the development of a competitive bioeconomy. This knowledge can foster the adoption of new methodological strategies to empower the large-scale production of biomass from commercially important microalgae. The present review focuses on the potential of carbon nanotubes (CNTs) to enhance photosynthetic performance of microalgae by (i) widening the spectral region available for the energy conversion reactions and (ii) increasing the tolerance of microalgae towards unfavourable conditions occurring in mass production. To this end, current understanding on the mechanisms of uptake and localization of CNTs in plant cells is discussed. The available ecotoxicological data were used in an attempt to assess the feasibility of CNT-based applications in algal biotechnology, by critically correlating the experimental conditions with the observed adverse effects. Furthermore, main structural and physicochemical properties of single- and multi-walled CNTs and common approaches for the functionalization and characterization of CNTs in biological environment are presented. Here, we explore the potential that nanotechnology can offer to enhance functions of algae, paving the way for a more efficient use of photosynthetic algal systems in the sustainable production of energy, biomass and high-value compounds.