The scarcity of water resources and environmental pollution have highlighted the need for sustainable wastewater treatment. Existing conventional treatment systems are energy-intensive and not always able to meet stringent disposal standards. Recently, algal-bacterial systems have emerged as environmentally friendly sustainable processes for wastewater treatment and resource recovery. The algal-bacterial systems work on the principle of the symbiotic relationship between algae and bacteria. This paper comprehensively discusses the most recent studies on algal-bacterial systems for wastewater treatment, factors affecting the treatment, and aspects of resource recovery from the biomass. The algal-bacterial interaction includes cell-to-cell communication, substrate exchange, and horizontal gene transfer. The quorum sensing (QS) molecules and their effects on algal-bacterial interactions are briefly discussed. The effect of the factors such as pH, temperature, C/N/P ratio, light intensity, and external aeration on the algal-bacterial systems have been discussed. An overview of the modeling aspects of algal-bacterial systems has been provided. The algal-bacterial systems have the potential for removing micropollutants because of the diverse possible interactions between algae-bacteria. The removal mechanisms of micropollutants - sorption, biodegradation, and photodegradation, have been reviewed. The harvesting methods and resource recovery aspects have been presented. The major challenges associated with algal-bacterial systems for real scale implementation and future perspectives have been discussed. Integrating wastewater treatment with the algal biorefinery concept reduces the overall waste component in a wastewater treatment system by converting the biomass into a useful product, resulting in a sustainable system that contributes to the circular bioeconomy.