Microalgae are rapidly growing, low-input requiring, sun light-utilizing microorganisms capable of converting carbon dioxide into various natural products, a major portion of which are hydrocarbons. Their cellular compartmentalization and photosynthetic apparatus depend on robust turnover of two hydrocarbon classes, isoprenoids and acyl-lipids. This review summarizes the current understanding of algal hydrocarbon metabolism, including carbon partitioning capacities, the localization and size of precursor pools, environmental effects on flux distribution, and limiting factors towards efficient (heterologous) hydrocarbon production. Questions and challenges regarding our knowledge of algal hydrocarbon metabolism as well as guidelines for systematic engineering are presented. Recent engineering achievements indicate fundamental plasticity in the (heterologous) hydrocarbon metabolism of green algae while highlighting their potential as renewable sources of these products.