There is a growing interest for the utilization of microalgae in the bioremediation of organic pollutants and the use of biomass as a biofuel feedstock. This study investigated the influence of phenol exposure and culture conditions on the phenol removal efficiency, biomass productivity and lipid contents of Tetradesmus obliquus. Plackett-Burman design identified CaCl₂, NaNO₃, and initial phenol concentration as the most important variables affecting on phenol removal. The optimum conditions to maximize biomass productivity, phenol removal and lipid content were determined using the Box-Behnken experimental design as 150.1 mg L⁻¹ phenol, 0.1 g L⁻¹ NaNO₃, and 0.03 g L⁻¹ CaCl₂. Under these conditions, phenol was completely removed from the optimized medium after 3 days and the biomass productivity and lipid content were 19.53 mg L⁻¹ day⁻¹ and 27.85% (w/w) after 10 days, respectively. Phenol treatment promoted algal biomass productivity to ∼1.3-folds and lipid productivity to ∼ 1.6-folds higher than the control treatment without adding phenol (negative control). Additionally, phenol altered the fatty acid methyl ester composition and increased the saturated and polyunsaturated fatty acid contents with concomitant decrease in the monounsaturated fatty acids. The predicted biodiesel characteristics viz. iodine value, cetane number, oxidation stability, kinematic viscosity, and flash point, in the presence of phenol were in accordance with the international standards. Accordingly, the present study indicated that phenol could be effectively bioremediated by T. obliquus with simultaneous promotion of the algal biomass and lipid productivity for biofuel production.