Although water is one of the most critical factors affecting the sustainable development of algal biofuels, it is much less studied as compared to the extensive research on algal biofuel production technologies. This paper provides a review of the recent studies on water consumption of the algae biofuel process and presents the water conservation technologies applicable at different stages of the algal biofuel process. Open ponds tend to have much higher water consumption (216 to 2000 gal/gal) than photobioreactors (25 to 72 gal/gal). Algae growth accounts for the highest water consumption (165 to 2000 gal/gal) in the open pond system. Water consumption during harvesting, oil extraction, and biofuel conversion are much less compared with the growth stage. Potential water conservation opportunities include technology innovations and better management practices at different stages of algal biofuel production.