Microalgae are promising sources of valuable carotenoids like β-carotene and astaxanthin with numerous health benefits. This review summarizes recent studies on producing these carotenoids in microalgae under different salinity and light-intensity conditions, which are key factors influencing their biosynthesis. The carotenoid biosynthesis pathways in microalgae, involving the methylerythritol phosphate pathway in chloroplasts, are described in detail. The effects of high salinity and light stress on stimulating astaxanthin accumulation in species like Haematococcus pluvialis and Chromochloris zofingiensis and their synergistic impact are discussed. Similarly, the review covers how high light and salinity induce β-carotene production in Dunaliella salina and other microalgae. The diverse health-promoting properties of astaxanthin and β-carotene, such as their antioxidant, antiinflammatory, and anticancer activities, are highlighted. Strategies to improve carotenoid yields in microalgae through environmental stresses, two-stage cultivation, genetic engineering, and metabolic engineering approaches are evaluated. Overall, this review highlights advancements in β-carotene and astaxanthin production reporting the different microalgal capability to produce carotenoids under different stress level like 31.5% increase in β-carotene accumulation in Dunaliella salina and astaxanthin productivity reaching 18.1 mg/L/day in Haematococcus lacustris. It also explores novel biotechnological strategies, including CRISPR-Cas9, for enhancing carotenoid yield.