Currently, microalgae have become a marvelous and resource-friendly alternative source of advantageous bioproducts, such as lipids, carbohydrates, proteins, or other bioactive compounds. Because of the richness of microalgae in these high-value-added metabolites, still, it is an underdeveloped source of sustainable energy and food. There are some hurdles to profitable production, such as culture contamination and costly harvesting techniques. In the current work, a chrysophyte was isolated from dairy wastewater, identified as Poterioochromonas malhamensis based on its morphology and partial 18S rRNA gene sequences. This isolate was used to remediate dairy waste water (DWW) and to obtain neutral lipids (fatty acids) from microalgae. Microalgal growth was optimized by using different concentrations of DWW, supplemented with all the nutritive requirements for better progression and flourishment. Maximum biomass yield 1.478 g L−1 was achieved by optimized cultural conditions (different concentrations of DWW with BBM media). This strain showed high nitrate and phosphate removal efficiency (87.45% and 88.96%), respectively in 15 days. The experimental results highlighted that the lipid content and the chemical oxygen demand (COD) removal were 31.60% and 88.84%, respectively, and the lipid profile of isolated microalga was C16:0, C16:1, C18:0, C18:1, and C18:2 fatty acids. For growth and treatment purposes, 75% DWW with Bold’s Basal Medium (BBM) media showed better results. This is the first report of DWW treatment using the microalga Poterioochromonas malhamensis, as far as we are aware. Its cultivation prevented the spread of pollution of freshwater sources, remedied the DWW, and generated important lipids for industry.