In search for a suitable algal bioreagent for monodisperse (homogenous mixture of same size and shape) gold nanoparticle production, a eukaryotic green alga Rhizoclonium fontinale was found to produce spherical (~16 nm size) nanoparticles, when exposed to 15 mg L−1 auric chloride solution at pH 9 for 72 h. In this connection, the effects of different concentrations of gold ions, amount of biomass, and pH of the exposure medium on nanoparticle synthesis were evaluated. Upregulation of stress-related compounds like, carotenoids and stress enzymes—catalase, ascorbate peroxidase, and super oxide dismutase of gold-exposed biomass, were recorded up to 24 h at the onset of gold nanoparticles synthesis, afterwards enzyme activity ceased but the nanoparticle production continued up to 72 h of exposure. Cell wall thickening, rapid akinete formation, pigment loss, giant cell formation, pyknosis, and purple coloration of the filaments during algae–gold interaction were also evident. The nanoparticles were characterized by UV–Vis spectroscopy, dynamic light scattering, high-resolution transmission electron microscopy, and energy dispersive X-ray spectroscopy. Environmental scanning electron microscopy indicated cell wall distortion of the filaments in Au3+ exposure as well as only intracellular production of gold nanoparticles by Rhizoclonium as no nanoparticles were found on the surface. © 2014, Springer Science+Business Media Dordrecht.