Principles of fluid mechanics, gas–liquid mass transfer, and irradiance controlled algal growth are integrated into a method for designing tubular photobioreactors in which the culture is circulated by an airlift pump. A 0.2 m3 photobioreactor designed using the proposed approach was proved in continuous outdoor culture of the microalga Phaeodactylum tricornutum. The culture performance was assessed under various conditions of irradiance, dilution rates and liquid velocities through the tubular solar collector. A biomass productivity of 1.90 g l−1 d−1 (or 32 g m−2 d−1) could be obtained at a dilution rate of 0.04 h−1. Photoinhibition was observed during hours of peak irradiance; the photosynthetic activity of the cells recovered a few hours later. Linear liquid velocities of 0.50 and 0.35 m s−1 in the solar collector gave similar biomass productivities, but the culture collapsed at lower velocities. The effect of dissolved oxygen concentration on productivity was quantified in indoor conditions; dissolved oxygen levels higher or lower than air saturation values reduced productivity. Under outdoor conditions, for given levels of oxygen supersaturation, the productivity decline was greater outdoors than indoors, suggesting that under intense outdoor illumination photooxidation contributed to loss of productivity in comparison with productivity loss due to oxygen inhibition alone. Dissolved oxygen values at the outlet of solar collector tube were up to 400% of air saturation.