Microalgae are receiving increased global attention as a potential sustainable “energy crop”for biofuel production. An important step to realizing the potential of algae is quantifying the demands commercial‐scale algal biofuel production will place on water and land resources. We present a high‐resolution spatiotemporal assessment that brings to bear fundamental questions of where production can occur, how many land and water resources are required, and how much energy is produced. Our study suggests that under current technology, microalgae have the potential to generate 220 × 109 L yr−1 of oil, equivalent to 48% of current U.S. petroleum imports for transportation. However, this level of production requires 5.5% of the land area in the conterminous United States and nearly three times the water currently used for irrigated agriculture, averaging 1421 L water per liter of oil. Optimizing the locations for microalgae production on the basis of water use efficiency can greatly reduce total water demand. For example, focusing on locations along the Gulf Coast, southeastern seaboard, and Great Lakes shows a 75% reduction in consumptive freshwater use to 350 L per liter of oil produced with a 67% reduction in land use. These optimized locations have the potential to generate an oil volume equivalent to 17% of imports for transportation fuels, equal to the Energy Independence and Security Act year 2022“advanced biofuels”production target and utilizing some 25% of the current irrigation demand. With proper planning, adequate land and water are available to meet a significant portion of the U.S. renewable fuel goals.

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