Response surface methodology was employed to investigate the effects of nitrogen (X-1), phosphorus (X-2), and glucose (X-3) on arsenic removal by fungal-algal pellets. X-1, X-3, and X1X3 had significant effects. Arsenic accumulation and transformation were compared among Chlorella vulgaris, Aspergillus oryzae, and fungal-algal pellets under different arsenate and phosphorus concentrations. Fungal-algal pellets had the highest removal rate and was best able to accumulate arsenate in all treatments. The reduction of arsenate to arsenite was found in all tested organisms, while arsenic methylation was only identified in C. vulgaris. The biomass of fungal-algal pellets was not inhibited by arsenate. SEM micrographs showed that arsenic led to a change in mycelial structure from compact to loose pellets. FT-IR spectra showed that four functional groups might be involved in arsenate adsorption. Arsenic tolerance and accumulation in fungal-algal pellets opens the way to its potential application in the remediation of arsenic from contaminated water.