Algae are mainly water plants dwelling on ponds, rivers, seas, lakes, oceans, ditches and other water bodies. Some species are also found on stones, the bark of trees, fences, etc generally in moist environment. They are photosynthetic organisms that have chlorophyll and can make their own food. Fungi do not have chlorophyll so these organisms cannot make their own food as algae do. These are decomposers that survive either consuming dead matter or eating off other organisms.
The green algae have an important bearing upon our lives both for good and for evil. In course of their food-making activity, they add oxygen to the water thus making more of this essential gas available for fish and other organisms that form an important part of our food supply. They also serve as food for these creatures. The evil side is that the green algae cause water pollution in lakes, tanks, ponds etc and import unpleasant flavor and odors.
Fungi have an assimilative or vegetative phase in which nutrients are taken up and mycelial growth in the substratum occurs. This phase is followed by reproductive phase in which the mycelium grows aerially and produces fruiting structure and reproductive cells or spores. A great many trees and other seed plants have a remarkable relationship with certain fungi. The mycelium of these fungi invades the root of the plants which assist in transporting water and minerals from the soil to the roots of the plants.
The major difference between algae and fungi can be described as follows: