Harvesting microalgal biomass using economic and ecological magnetic nanoparticles has been a promising approach due to its superior efficiency, low operating costs, scalable performance, and environmental safety. In this study, we have investigated the efficient harvesting of freshwater microalgae Chlorella sorokiniana (UUIND6) by using synthesized magnetic nanoparticles (Fe3O4). Simultaneously, the harvested microalgae biomass has been applied for hydrothermal liquefaction. Fe3O4 nanoparticles accrued in the magnetically harvested microalgae biomass have played a catalytic role in the hydrothermal liquefaction process under the varied parameters of temperature (250‒350°C), concentration (0.5‒1.5%), and retention times (30‒60 min). The results have revealed an efficient harvesting of microalgae biomass of ~ 83% in 60 min to be used for hydrothermal liquefaction. The response surface methodology was applied to maximize the yield of biochar and bio-oil. It was observed that the maximum biochar of 71.2% was obtained at 250°C using 0.5% Fe3O4 catalysts (Fe3O4) in 45 min. However, the maximum amount of bio-oil of 28% was obtained at 350°C using 1.5% Fe3O4 catalysts in 45 min. This study presents an economical pioneering approach to produce biochar and bio-oil from microalgae biomass for biofuel as well as ecologically safe applications. © 2023 Taylor & Francis Group, LLC.