Diatoms as photosynthetic cell factories can provide the means to reach a sustainable production of petrochemical substitutes and bioactive compounds; however, a requisite to achieve this goal is to increase the species photosynthetic efficiency, which generally remains less than five percent. We have developed and implemented a strategy, herein referred to as *I*ntracellular *S*pectral *R*ecompositioning of light (or *ISR*), which through absorption of excess blue light and its intracellular emission in green spectral band, can improve light utilization. We demonstrate that ISR can be employed chemogenically, by using lipophilic fluorophores, or biogenically, through expression of an enhanced green fluorescent protein (eGFP) in the model diatom *Phaeodactylum tricornutum*. Engineered *P. tricornutum* cells expressing eGFP achieved twenty-eight percent higher efficiency in photosynthesis than the parental strain under a mixed red and blue light condition. Transcriptome analysis of the engineered strain identified up-regulation of genes, such as the Light Harvesting Complex Protein X (LHCX) genes including *LHCX1*, *LHCX3*, and *LHCX4*, along with down regulation of non-photochemical quenching (NPQ) genes involved in response to light stress. The developed ISR approach is applicable toward improving cultivation of diatomaceous production strains under high light intensity cultivation in indoor reactors, or in open outdoor ponds.