Municipal wastewater, known for its high nitrogen and phosphorus levels, disrupts natural biogeochemical cycles. However, these nutrients are vital for cultivating green algae, which show potential as a sustainable energy source. In this study, Spirulina microalgae biomass was cultivated from diluted municipal wastewater and converted into biofuel to assess its compatibility with conventional diesel applications. Algae growth rate, nutrient removal from wastewater, and proximate and ultimate analyses of the biomass were conducted. Elemental, functional group, and chemical analyses of the biodiesel were also performed using an elemental analyzer, Fourier-transform infrared (FTIR) spectroscopy, and Gas Chromatography-Mass Spectrometry (GC-MS), respectively. Results showed effective removal of calcium, magnesium, potassium, and nitrogen nutrients by 44.7%, 71.7%, 50%, and 55.6%, respectively, through algae cultivation. Proximate and ultimate analyses confirmed the biomass's energy content and efficiency for energy production. Elemental analysis of biodiesel revealed significant contributions of carbon, hydrogen, and oxygen, while FTIR and GC-MS analyses identified carbon-based components and methyl esters as major constituents, respectively. Physicochemical properties of algae biodiesel met ASTM D6751 limits. This comprehensive assessment suggests that Spirulina algae from wastewater treatment holds promise as a viable energy source for diesel applications.