There is currently substantial interest in utilizing eukaryotic algae for the renewable production of several bioenergy carriers, including starches for alcohols, lipids for diesel fuel surrogates, and H2 for fuel cells. Relative to terrestrial biofuel feedstocks, algae can convert solar energy into fuels at higher photosynthetic efficiencies, and can thrive in salt water systems. Recently, there has been considerable progress in identifying relevant bioenergy genes and pathways in microalgae, and powerful genetic techniques have been developed to engineer some strains via the targeted disruption of endogenous genes and/or transgene expression. Collectively, the progress that has been realized in these areas is rapidly advancing our ability to genetically optimize the production of targeted biofuels.