Given the problems of species delimitation in algae using morphology or sexual compatibility, molecular data are becoming the standard for delimiting species and testing their traditional boundaries. The idea that species are separately evolving metapopulation lineages, along with theoretical progress in phylogenetic and population genetic analyses, has led to the development of new methods of species delimitation. We review these recent developments in DNA-based species delimitation methods, and discuss how they have changed and continue to change our understanding of algal species boundaries. Although single-locus approaches have proven effective for a first rapid and large-scale assessment of species diversity, species delimitation based on single gene trees falls short due to gene tree-species tree incongruence, caused by confounding processes like incomplete lineage sorting, trans-species polymorphism, hybridization and introgression. Data from unlinked loci and multi-species coalescent methods, which combine principles from phylogenetics and population genetics, may now be able to account for these complicating factors. Several of these methods also provide statistical support regarding species boundaries, which is important because speciation is a process and therefore uncertainty about precise species boundaries is inevitable in recently diverged lineages.