Biodesign concept is becoming more popular among studies that can help with reaching climate neutral built environment and combat global warming instead of continuing the common unsustainable lifestyle. Biodesign consists of learning and taking inspiration from nature, mimicking biological processes, and designing in collaboration with living organisms. Microalgae that live in aquatic environments can be used for this purpose and are the focus of this study. These photosynthetic organisms have an essential place in the ecosystems on earth. They serve as oxygen and ozone producers in the atmosphere, a sink for carbon dioxide, a food source, a biofuel resource, and a bio-degrader for waste. These functions are among the important needs of urban areas. Aim: This article aims to evaluate the possibilities of microalgae in the urban fabric for designing carbon neutral settlements. Method: The study examines the purposes and effects of algae applications through case studies. At the same time, SWOT analysis helps to understand the advantages and disadvantages of microalgae production for sustainable development. Results: The results show that microalgae applications help the built environment by realizing ecosystem services including, being carbon sinks, treating water, conserving energy, producing food, and improving air quality. Conclusion: Microalgae have the potential to minimize greenhouse gas emissions, improve soil, water and air quality, and ecological sustainability by promoting biodiversity. In addition, they serve socio-economic sustainability by providing employment, food security, energy security and resource savings, thus they have the potential to help reaching both carbon neutral cities and a sustainable environment.