Background: Microalgae are one of the promising unicellular species for biosynthesis of functional natural products, such as omega-3 long-chain polyunsaturated fatty acids, carotenoids, proteins, and vitamins. As they readily grow on organic and nitrogenous substrates, they have vast phycoremediation potential for different industrial wastewater and side-streams. The side-streams from dairy industry have the enormous potential of valorization as they have high carbon and nutrient load, which could serve as growth media for microalgal cultivation. Scope and approach: This review addresses the most recent examples of valorization of several types of dairy side-streams using microalgae. The aim is to provide better understanding of the issues and challenges of valorizing the industrial dairy side-streams as substrates for value added microalgal biomass production with focus on nutrient, particularly lactose utilization by using different microalgae species, mostly from Chlorella, Scenedesmus, and Spirulina genera. Key finding and conclusions: So far, mixotrophic and heterotrophic microalgae cultivation has been tested in various genuine and model dairy side-streams, wherein mixotrophic cultivation exhibited better biomass productivity. Moreover, this review identifies microalgae cultures capable of nutrient utilization and lactose assimilation, providing valuable guidance for future research in phycoremediation of dairy side-streams for value-added food production. Further investigations on different microalgal species for lactose utilization and β-galactosidase activity in model media are required to enable efficient valorization of lactose in the side-streams.