We conducted a series of experiments using Taguchi methods to determine optimum conditions for arsenic (As) biotransformation. We found that N is critical for M. aeruginosa As(V) biotransformation, particularly with regard to As(III) transformation. Also, As accumulation benefited from low P levels when combined with high N concentrations. Phosphate was second to As(V) as the primary factor to affect As accumulation. Additionally, we found that the small amounts of As that accumulated under low concentrations of As and high P were tightly stored in living algal cells and were easily released after cell death. Our results will be helpful for the understanding, practical applications, and overall control of the key environmental factors, particularly those associated with algal bioremediation for As-polluted water.