The present work is a study on the biological synthesis of cadmium sulphide (CdS) nanoparticles using blue-green algae that is popularly used as a food supplement. This synthesis is unique in the sense that no external sulphur precursor is required, the CdS nanoparticles are synthesized in situ in the algal medium. The CdS nanoparticles thus synthesized are photoluminescent and can act as highly efficient photocatalysts for degradation of the dye pollutant malachite green. Thus the CdS nanoparticles synthesized in situ in the algae conform to the desired criteria of waste water treatment i.e. biosorption of the pollutant and its subsequent degradation. The novelty of this work also lies in its potential for use in bioremediation by conversion of the toxic Cd(II) ion to less toxic CdS nanoparticles within the algal framework.