The impending danger of climate change and pollution can now be seen on the world panorama. The concentration of CO2, the most important Green House Gas (GHG), has reached to formidable levels. Although carbon capture and storage (CCS) methods have been largely worked upon, they are cumbersome in terms of economy and their long term environmental safety raises a concern. Alternatively, bio-sequestration of CO2 using microalgal cell factories has emerged as a promising way of recycling CO2 into biomass via photosynthesis which in turn could be used for the production of bioenergy and other value-added products. Despite enormous potential, the production of microalgae for low-value bulk products and bulk products such as biofuels, is heretofore, not feasible. To achieve economic viability and sustainability, major hurdles in both, the upstream and downstream processes have to be overcome. Recent technoeconomic analyses and life-cycle assessments of microalgae-based production systems have suggested that the only possible way for scaling up the production is to completely use the biomass in an integrated biorefinery set-up wherein every valuable component is extracted, processed and valorized. This article provides a brief yet comprehensive review of the present carbon sequestration and utilization technologies, focusing primarily on biological CO2 capture by microalgae in the context of bio-refinery. The paper discusses various products of microalgal biorefinery and aims to assess the opportunities, challenges and current state-of-the-art of microalgae-based CO2 bioconversion, which are essential to the sustainability of this approach in terms of the environment as well as the economy.