Production of microalgae as feedstock for biofuels must deal with a number of challenges including constraints imposed by local conditions. One solution is to use indigenous strains adapted to local climatic conditions. The present report describes the isolation, identification, and characterization of 32 microalgal strains from different ecological habitats: desert freshwater channels, northern region, and saline regions of Pakistan. The effects of temperature on algal growth rates, biomass productivity, and lipid content were determined through growth at 12, 20, and 35 °C for 15 days under 2% CO2 Responses to temperature varied among species with 20 °C being the optimum temperature in general, although, exceptionally, the best overall growth rate was found for strain S29 (0.311 d−1) at 12 °C. In some cases high biomass productivity was observed at 35 °C, and, depending upon the strain, the maximum lipid content was obtained at different temperatures, including 12 °C. Fatty acid methyl ester (FAME) analysis showed that the major fatty acids present were palmitic, stearic, oleic, linoleic, and linolenic. Oleic acid (C18:1) was the predominant fatty acid, with the specific FAME profile varying with strain. Thus, there is a rich diversity of microalgal strains native to Pakistan, some of which, characterized here, could be suitable for biodiesel production or other biotechnological applications.