For a long time, a large amount of harmful materials, like CO2, SO2, NOx and smokedust brought by coal′s burning in both China and the world has been creating grievous atmospheric pollution. Much emphasis has been putting on reducing the emission of flue gas, and using microalgae to achieve the aim, which is one of the international research hotspots. In this paper, the theories about the physiological mechanism of carbon fixation and emission reduction of coal fired flue gas by microalgae, the research progress in some key techniques such as microalgae strain selection and design of new photobioreactors are outlined. Meanwhile, the existing problems and future trends of large-scale application of emission reduction by microalgae are discussed.