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The possibility of utilizing lignocellulosic agro-industrial waste products such as cassava peel hydrolysate (CPH) as carbon sources for polyhydroxybutyrate (PHB) biosynthesis and characterization by Amazonian microalga <i>Stigeoclonium</i> sp. B23. was investigated. Cassava peel was hydrolyzed to reducing sugars to obtain increased glucose content with 2.56 ± 0.07 mmol/L. Prior to obtaining PHB, <i>Stigeoclonium</i> sp. B23 was grown in BG-11 for characterization and Z8 media for evaluation of PHB nanoparticles’ cytotoxicity in zebrafish embryos. As results, microalga produced the highest amount of dry weight of PHB with 12.16 ± 1.28 (%) in modified Z8 medium, and PHB nanoparticles exerted some toxicity on zebrafish embryos at concentrations of 6.25–100 µg/mL, increased mortality (<35%) and lethality indicators as lack of somite formation (<25%), non-detachment of tail, and lack of heartbeat (both <15%). Characterization of PHB by scanning electron microscopy (SEM), X-ray diffraction (XRD), differential scanning calorimeter (DSC), and thermogravimetry (TGA) analysis revealed the polymer obtained from CPH cultivation to be morphologically, thermally, physically, and biologically acceptable and promising for its use as a biomaterial and confirmed the structure of the polymer as PHB. The findings revealed that microalgal PHB from <i>Stigeoclonium</i> sp. B23 was a promising and biologically feasible new option with high commercial value, potential for biomaterial applications, and also suggested the use of cassava peel as an alternative renewable resource of carbon for PHB biosynthesis and the non-use of agro-industrial waste and dumping concerns.