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The Talcher coalfield region in Angul district, Odisha, India, offers a unique ecological setting shaped by intensive coal mining activities, making it an important site for studying algal diversity. Spanning approximately 1,800 square kilometers, the area exhibits a range of physico-chemical parameters that significantly influence its aquatic ecosystems. This study investigates the algal diversity in the coalfield and examines its relationship with key physico-chemical factors. A total of 35 algal species were recorded, encompassing 21 genera, 18 families, and 15 orders across five major algal divisions. The division Bacillariophyta (diatoms) was the most dominant, with 19 species, followed by Charophyta (6 species), Cyanophyta (4 species), Chlorophyta (3 species), and Euglenophyta (3 species). The results revealed that temperature, pH, and dissolved oxygen (DO) are the primary environmental factors influencing algal diversity in the Talcher coalfield. Moreover, Canonical Correspondence Analysis (CCA) revealed that temperature, pH, and dissolved oxygen are key environmental drivers influencing algal diversity in the Talcher coalfield area. The study concludes that coal mining environments, provide favourable microhabitats for diverse algal communities despite of anthropogenic activity. The observed algal diversity reflects a complex interaction between natural conditions and mining-induced changes. These findings emphasize the need for sustained ecological monitoring and mitigation strategies to manage the environmental impacts of coal mining. The dataset of our study provides a valuable baseline snapshot of algal diversity in mining-impacted habitats of coalfield areas of Talcher.