Production and extraction systems of algal protein and handling process of functional food ingredients need to control several parameters such as temperature, pH, intensity, and turbidity. Many researchers have investigated the Internet of Things (IoT) approach for enhancing the yield of microalgae biomass and machine learning for identifying and classifying microalgae. However, there have been few specific studies on using IoT and artificial intelligence (AI) for production and extraction of algal protein as well as functional food ingredients processing. In order to improve the production of algal protein and functional food ingredients, the implementation of smart system is a must to have real-time monitoring, remote control system, quick response to sudden events, prediction and characterisation. Techniques of IoT and AI are expected to help functional food industries to have a big breakthrough in the future. Manufacturing and implementation of beneficial smart systems are important to provide convenience and to increase the efficiency of work by using the interconnectivity of IoT devices to have good capturing, processing, archiving, analyzing, and automation. This review investigates the possibilities of implementation of IoT and AI in production and extraction of algal protein and processing of functional food ingredients.