Photobioreactors heat up significantly during the day due to irradiation by sunlight. High temperatures affect cell physiology negatively, causing reduced growth and productivity. To elucidate the microalgal response to stressful supra-optimal temperature, we studied the physiology of Picochlorum sp. (BPE23) after increasing the growth temperature from 30 °C to 42 °C, whereas 38 °C is its optimal growth temperature. Cell growth, cell composition and mRNA expression patterns were regularly analyzed for 120 h after increasing the temperature. The supra-optimal temperature caused cell cycle arrest for 8 h, with concomitant changes in metabolic activity. Accumulation of fatty acids was observed during this period to store unspent energy which was otherwise used for growth. In addition, the microalgae changed their pigment and fatty acid composition. For example, palmitic acid (C16:0) content in the polar fatty acid fraction increased by 30%, hypothetically to reduce membrane fluidity to counteract the effect of increased temperature. After the relief of cell cycle arrest, the metabolic activity of Picochlorum sp. (BPE23) reduced significantly over time. A strong response in gene expression was observed directly after the increase in temperature, which was dampened in the remainder of the experiment. mRNA expression levels associated with pathways associated with genes acting in photosynthesis, carbon fixation, ribosome, citrate cycle, and biosynthesis of metabolites and amino acids were downregulated, whereas the proteasome, autophagy and endocytosis were upregulated.