For algal biofuels to be economically sustainable and avoid exacerbating nutrient pollution, algal cultivation and processing must maximize rates of biofuel production while simultaneously minimizing the consumption of nitrogen (N) and phosphorus (P) fertilizers. We experimentally tested whether algal polycultures could be engineered to improve N and P nutrient-use efficiency compared to monocultures by balancing trade-offs in nutrient-use efficiency and biocrude production. We analyzed the flows of N and P through the processes of cultivation, biocrude production through hydrothermal liquefaction, and nutrient recycling in a laboratory-scale system. None of the six species we examined exhibited high N efficiency, P efficiency, and biocrude production simultaneously; each had poor performance in at least one function (i.e., <25th percentile). Polycultures of two to six species did not outperform the best species in any single function, but some polycultures exhibited more balanced performance and maintained all three functions at higher levels simultaneously than any of the monocultures (i.e., >67th percentile). Moreover, certain polycultures came closer to optimizing all three functions than any of the monocultures. By balancing trade-offs between N and P efficiency and biocrude production, polycultures could be used to simultaneously reduce the demand for both N and P fertilizers by up to 85%.