Lipid peroxidation is commonly used as an indicator of oxidative stress. It can be caused by a number of reactive species. The phenomenon of oxidative stress arises from the deleterious reactions of oxygen, which are an unfortunate consequence of photosynthesis for any living organism including algae. These reactions are mediated by reduced oxygen species such as superoxide radicals or hydrogen peroxide (H₂O₂). They can form species damaging essential cellular components. Superoxide and H₂O₂ can react to form hydroxyl radicals (OH*) in the presence of metal ions. Hydroxyl radicals are among the most reactive species able to react indiscriminately to cause lipid peroxidation, the denaturation of proteins and the mutation of DNA. The role of excited and highly reactive intermediates in oxygenic photosynthesis poses unique problems for algae in terms of potential oxidative damage to the photosynthetic apparatus. Recent use of molecular biological approaches provides new insights into photoprotection, signal transduction and future exploitation of algal strains for the large scale production of natural antioxidants such as superoxide dismutase (SOD), catalase (CAT), peroxidase (POD), glutathion reductase (GR) and reduced glutathione (GSH) etc. This article deals with the mechanisms for the formation of reactive oxygen species (ROS) and antioxidants in algae and its future applications.