Finding an eco-friendly process for the decolorization of distillery wastewaters is a major concern. This study shows that the Chlorella vulgaris CCAP 211/19 strain can be used for color removal and direct production of oleaginous biomass. A response surface method was used for determining optimal operating conditions, including the dilution factor of industrial wastewater. The highest daily light supply values were the most efficient for color removal. The analysis of the microalgae physiological status confirmed that these colored waters could have a photoprotective action. Moreover, the increase in photosystem 2 activities of C. vulgaris CCAP 211/19 strain after short-term incubations in the presence of a synthetic melanoidin confirmed that this fraction is involved in the enhancement of lipid-enriched biomass production. The results show for the first time the stimulation effect of a melanoidin fraction on the lipid content and productivity by C. vulgaris. These results suggest that this approach may be used to design a closed loop, including water and CO2 recycling for the wastewater dilution and photosynthetic carbon fixation, respectively, while providing biomass for useful renewable algae-based feedstocks of potential interest for a distillery process.