Cellulose nanocrystals (CNCs) are promising materials that are readily extracted from plants and other cellulose-containing organisms. In this study, CNCs were isolated from freshwater green algae (Cladophora rupestris) thriving in a volcanic lake, using hydrobromic acid (HBr) hydrolysis. Morphological and structural studies revealed highly crystalline CNCs (94.0 % crystallinity index) with preferred orientation to [100] lattice plane as shown by XRD measurements and have an average diameter of 20.0 (+4.4) nm as shown by TEM. Thermal studies showed increased temperature for thermal decomposition of CNCs isolation. The isolated CNCs were reinforced into starch based biocomposites via solution casting and evaporation method. Mechanical strength was improved as high as 78% upon addition of 1% cellulose nanocrystals in the films. The primary hydroxyl groups of CNCs were modified to produce an Azide-bearing CNC derivative. The cholesterol to be attached was first converted to alkyne-bearing cholesterol. The azide and alkyne was reacted using click chemistry to attach the cholesteric compound into the cellulose. Characterization reveal successful grafting of cholesterol as evidence by TEM, XRD and NMR albeit in low incorporation of 1:42. By attaching optically active substances in cellulose nanocrystal, these derivatives could be used as novel materials in light related applications.