In the search for a sustainable and an effective biofuels platform, microalgae have captured the fascination of scientists all over the world with its endless potential. These photosynthetic microorganisms can act as a single-step biocatalytic ‘factory’ that generates fuel and other high valued products through carbon fixation and photosynthesis. Genetic engineering can be used to improve biofuel titres or to introduce new biofuel synthesis pathways. In this thesis, two genetically modified strains of Chlamydomonas reinhardtii capable of secreting patchoulol and bisabolene were studied. The aim of this thesis is to improve cell growth and terpenoid production in order to develop a continuous production process. A flat plate photobioreactor was used to facilitate algal growth and sesquiterpenoid production, while also measuring the key process parameters under controlled conditions. A new nutrient formulation was developed and recorded a 74% improvement in maximum biomass concentration. Favourable growth conditions for patchoulol production included a temperature of 32°C, continuous light at 100 μE·s-1·m-2 and an initial pH of 7.5. Using the same approach, high-density bisabolene-secreting culture was cultivated at 100 μE·s-1·m-2 and 30°C. Growth is further augmented by supplying carbon dioxide and acetate in a mixotrophic condition. A chemostat process was developed to extend bisabolene production, and perturbations study revealed that the combination of higher light intensity at 125 μE·s-1·m-2 and a dilution rate of 0.01 h-1 produced 19.5 μg·L-1·h-1 bisabolene over 80 days. The chemostat system was upgraded with a continuous solvent extraction system that was successfully operated to produce 10.5 μg·g-1·h-1 bisabolene over 30 days. Finally, the entire production system was simulated using ASPEN Plus to determine the energy requirements of a pilot plant capacity. The engineering approach developed here may be used in the future to investigate the growth of different microalgal species secreting various terpenoid products and evaluate other separation techniques.