Improving the ecological status of water sources is a growing focus for many developed and developing nations, in particular with reducing nitrogen and phosphorus in wastewater effluent. In recent years, mixotrophic micro-algae have received increased interest in implementing them as part of wastewater treatment. This is based on their ability to utilise organic and inorganic carbon, as well as inorganic nitrogen (N) and phosphorous (P) in wastewater for their growth, with the desired results of a reduction in the concentration of these substances in the water. The aim of this review is to provide a critical account of micro-algae as an important step in wastewater treatment for enhancing the reduction of N, P and the chemical oxygen demand (COD) in wastewater, whilst utilising a fraction of the energy demand of conventional biological treatment systems. Here, we begin with an overview of the various steps in the treatment process, followed by a review of the cellular and metabolic mechanisms that micro-algae use to reduce N, P and COD of wastewater with identification of when the process may potentially be most effective. We also describe the various abiotic and biotic factors influencing micro-algae wastewater treatment, together with a review of bioreactor configuration and design. Furthermore, a detailed overview is provided of the current state-of-the-art in the use of micro-algae in wastewater treatment.