Display omitted •This review focused on the methane generation using micro and macroalgae.•Discussed key issues and pretreatment strategies to improve AD and methane yield.•Summarized co-digestion process using algal biomass to enhance methane yield.•Enlightened future perspectives and challenges for algal methane production. Biogas production using algal resources has been widely studied as a green and alternative renewable technology. This review provides an extended overview of recent advances in biomethane production via direct anaerobic digestion (AD) of microalgae, macroalgae and co-digestion mechanism on biomethane production and future challenges and prospects for its scaled-up applications. The effects of pretreatment in the preparation of algal feedstock for methane generation are discussed briefly. The role of different operational and environmental parameters for instance pH, temperature, nutrients, organic loading rate (OLR) and hydraulic retention time (HRT) on sustainable methane generation are also reviewed. Finally, an outlook on the possible options towards the scale up and enhancement strategies has been provided. This review could encourage further studies in this area, to intend and operate continuous mode by designing stable and reliable bioreactor systems and to analyze the possibilities and potential of co-digestion for the promotion of algal-biomethane technology.