In this study, the toxicity, biotransformation and bioaccumulation of arsenite and arsenate in a soil microalga, Chlorella sp., were investigated using different phosphate levels. The results indicated that arsenate was highly toxic than arsenite to the alga, and the phosphate limitation in growth media greatly enhanced arsenate toxicity. The uptake of arsenate in algal cells was more than that of arsenite, and the predominant species in the growth media was arsenate after 8 days of exposure to arsenite or arsenate, indicating arsenite oxidation by this microalga. Arsenate reduction was also observed when the alga was incubated in a phosphate-limiting growth medium. Similar to the process of biotransformation, the alga accumulated more arsenic when it was exposed to arsenate and preferably more in a phosphate-limiting condition. Although phosphate significantly influences the biotransformation and bioaccumulation of arsenic, the oxidizing ability and higher accumulation capacity of this alga have great potential for its application in arsenic bioremediation.