A novel laboratory model was designed to study the arsenic (As) biotransformation potential of the microalgaeChlorella vulgarisandNannochloropsissp. and the cyanobacteriumAnabaena doliolum. The Algae were treated under different concentrations of As(III) to check their growth, toxicity optimization, and volatilization potential. The results revealed that the algaNannochloropsissp. was better adopted in term of growth rate and biomass thanC. vulgarisandA. doliolum.Algae grown under an As(III) environment can tolerate up to 200 μM As(III) with moderate toxicity impact. Further, the present study revealed the biotransformation capacity of the algaeA. doliolum,Nannochloropsissp., andChlorella vulgaris. The microalgaNannochloropsissp. volatilized a large maximum amount of As (4,393 ng), followed byC. vulgaris(4382.75 ng) andA. doliolum(2687.21 ng) after 21 days. The present study showed that As(III) stressed algae-conferred resistance and provided tolerance through high production of glutathione content and As-GSH chemistry inside cells. Thus, the biotransformation potential of algae may contribute to As reduction, biogeochemistry, and detoxification at a large scale.