Microalgal cultivation using wastewater is now regarded as essential for biodiesel production, as two goals can be achieved simultaneously; that is, nutrient removal efficiency and biomass production. Therefore, this study examined the effects of carbon sources, the N:P ratio, and the hydraulic retention time (HRT) to identify the optimal conditions for nutrient removal efficiency and biomass production. The effluent from a 2nd lagoon was used to cultivate microalgae. Whereas the algal species diversity and lipid content increased with a longer HRT, the algal biomass productivity decreased. Different carbon sources also affected the algal species composition. Diatoms were dominant with an increased pH when bicarbonate was supplied. However, 2% $CO_2$ gas led to a lower pH and the dominance of filamentous green algae with a much lower biomass productivity. Among the experiments, the highest chlorophyll-a concentration and lipid productivity were obtained with the addition of phosphate up to 0.5 mg/l P, since phosphorus was in short supply compared with nitrogen. The N and P removal efficiencies were also higher with a balanced N:P ratio, based on the addition of phosphate. Thus, optimizing the N:P ratio for the dominant algae could be critical in attaining higher algal growth, lipid productivity, and nutrient removal efficiency.