•Marine diatom P. tricornutum grew well in mixed wastewater and seawater.•P. tricornutum demonstrated high nutrient removal ability under MW: SW = 1:1 and 2:1.•Biomass and lipid productivity were improved under MW: SW = 1:1 and 2:1 with aeration.•Highest lipid productivity was achieved with two-step cultivation under MW: SW = 1:1. This study was conducted to evaluate the potential of the marine diatom Phaeodactylum tricornutum in nutrient removal coupled with biodiesel production using different ratios of mixed municipal wastewater (MW) and seawater (SW) as the growth medium. The results indicated that P. tricornutum exhibited high nutrient removal efficiency with the ratios of MW: SW = 1:1 and MW: SW = 2:1, e.g. 87.7–89.9% for chemical oxygen demand (COD), 82.2–86.7% for total nitrogen (TN), 96.0–97.0% for total phosphorus, and 76.9–84.2% for ammonium (NH3-N). Significantly higher biomass and lipid productivity were obtained with aeration. The highest lipid productivity of P. tricornutum was 54.76 mg/L/day, which was obtained with a two-step cultivation using the ratio of MW: SW = 1:1 by diluting half of the mixture and bubbling with 5% CO2 during the second step. These results suggested that the marine diatom P. tricornutum exhibited great potential for using mixed wastewater for wastewater treatment and biodiesel production.