Palm oil mill effluent (POME) released from conventional treatment systems poses severe environmental problems due to its dark color, its high chemical oxygen demand (COD), and high content of phenolic compounds. However, the possible biodegradation of phenolic compounds and color by microalgae was not well explored. This research aimed to reveal optimal conditions for pollutant removal through biodegradation by the cyanobacterium Arthrospira platensis. This species was grown under a range of POME fractions and environmental conditions (irradiance, salinity, nutrients) during which growth, final biomass, color, COD, and phenolic compound levels were followed. POME fractions influenced A. platensis growth rate, final biomass, COD, and color removal. The optimization of phenolic compound removal by using central composite design (CCD) response surface methodology (RSM) showed that low light and high initial phenolic compounds promoted the activity of A. platensis to degrade phenolic compounds. The combination of high initial phenolic compounds and high light intensity increased the growth rate up to 0.45 days⁻¹ and final biomass up to 400 mg L⁻¹, while total phenolic compounds were almost completely (94%) removed. Finally, this study showed that phenolic compounds and color degradation from POME were dominated by the activity of photodegradation at high irradiance, while the activity of A. platensis dominated at low light intensity.