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Wastewater treatment faces increasing pressure to transition from energy-intensive technology to sustainable alternatives aligned with global resource efficiency and climate goals. Microalgae-based processes have emerged as promising solutions in environmental remediation applications; however, their large-scale deployment remains constrained by contamination risks, stringent operational requirements, and high downstream costs. These challenges are particularly evident in the treatment of nutrient-rich industrial influents such as dairy wastewater, which represents an environmental concern. Addressing this gap is important for strengthening overall climate action efforts and safeguarding ecosystems by reducing greenhouse gas emissions and transforming nutrient loads from pollution sources into potential resources. In this study, a two-stage biological treatment of raw dairy wastewater was tested as an alternative to conventional technology. The process relied on activated algae biomass, consisting of microalgae-bacteria consortia, operated in sequencing batch mode. The treatment stages were strategically designed to address elevated organic and ammonium loads while maintaining aerobic conditions exclusively through photosynthesis. The first stage operated at high COD loadings (>1 g O 2 L) and achieved organic matter removal above 80%, while the second stage, adapted to lower COD (<0.5 g O 2 L), ensured residual ammonium below the detection limit and overall COD removal up to 99%. Optimization of operational conditions further improved microalgae harvesting efficiency (from 88.6 ± 2.7% to 94.4 ± 1.8%) and enhanced floc stability through diversification of microalgae communities. Complementary, microfauna analysis outlined the presence of protozoan and metazoan populations confirming process stability and ecological balance comparable to traditional activated sludge system. The findings demonstrate potential of the activated algae system as a resilient and resource-efficient alternative to conventional wastewater treatment technology. By avoiding energy demand for mechanical aeration and ensuring nutrient recovery in line with environmental regulatory frameworks, the developed process supports sustainable wastewater treatment management while aligning with international goals on climate change mitigation and aquatic ecosystems protection.