The present study was conducted to assess the strain aptness, phycoremediation potential and lipid yield in microalgae Chloroccocum humicola and Oscillatoria sp. Results revealed that microalgae treated with different concentration of wastewater (25%, 50%, 75% and 100%) recovered nutrients (Nitrogen: 50.55–85.90%, Phosphorus: 69.98–93.72%) and removed heavy metals (24.17–88.10%) from wastewater. Microalgae C. humicola showed significant reduction in physico-chemical parameters of wastewater at 25% and 50% respectively with considerable increase in lipid production (1.61 folds) at 50% wastewater concentration. In order to counterbalance the wastewater induced toxicity, both microalgae exhibited stimulated antioxidants viz., proline (1.26–4.04 folds), ascorbic acid (1.01–9.21 folds), cysteine (1.44–4.92 folds), catalase (0.99–3.63 folds), superoxide dismutase (1.15–1.43 folds) and glutathione reductase (1.43–6.67 folds) at different wastewater concentrations. Further, Fourier transforms infrared spectroscopy spectral elucidation of Chloroccocum humicola at 50% reflected high lipid peak in the regions 3000–2800 cm−1 as compared to Oscillatoria sp. Thus, growth characteristics, biochemical responses and lipid yield presented the suitability of the Chloroccocum humicola to be used in phycoremedation, resource recovery as well as lipid production, which may be further utilized as potent feedstock for third generation energy demand.