MADS-box transcription factors (TFs) have not been functionally delineated in microalgae. In this study, the role of CsubMADS1 from microalga Coccomyxa subellipsoidea C-169 has been explored. Unlike Type II MADS-box proteins of seed plants with MADS, Intervening, K-box, and C domains, CsubMADS1 only has MADS and Intervening domains. It forms a group with MADS TFs from algae in the phylogenetic tree within the Type II MIKCC clade. CsubMADS1 is expressed strongly in the lag phase of growth. The CsubMADS1 monomer does not have a specific localization in the nucleus, and it forms homodimers to localize exclusively in the nucleus. The monomer has two nuclear localization signals (NLSs): an N-terminal NLS and an internal NLS. The internal NLS is functional, and the homodimer requires two NLSs for specific nuclear localization. Overexpression (OX) of CsubMADS1 slows down the growth of the culture and leads to the creation of giant polyploid multinucleate cells, resembling autospore mother cells. This implies that the release of autospores from autospore mother cells may be delayed. Thus, in wild-type (WT) cells, CsubMADS1 may play a crucial role in slowing down growth during the lag phase. Due to starvation in 2-month-old colonies on solid media, the WT colonies produce mucilage, whereas OX colonies produce significantly less mucilage. Thus, CsubMADS1 also negatively regulates stress-induced mucilage production and probably plays a role in stress tolerance during the lag phase. Taken together, our results reveal that CsubMADS1 is a key TF involved in the development and stress tolerance of this polar microalga.