Methods and apparatus for processing algae are described in which a hydrophilic ionic liquid is used to lyse algae cells. The lysate separates into at least two layers including a lipid-containing hydrophobic layer and an ionic liquid-containing hydrophilic layer. A salt or salt solution may be used to remove water from the ionic liquid-containing layer before the ionic liquid is reused. The used salt may also be dried and/or concentrated and reused. The method can operate at relatively low lysis, processing, and recycling temperatures, which minimizes the environmental impact of algae processing while providing reusable biofuels and other useful products.