The production of hepatotoxic cyclic heptapeptides, microcystins, is almost exclusively reported from planktonic cyanobacteria. Here we show that a terrestrial cyanobacterium Nostoc sp. strain IO-102-I isolated from a lichen association produces six different microcystins. Microcystins were identified with liquid chromatography-UV mass spectrometry by their retention times, UV spectra, mass fragmentation, and comparison to microcystins from the aquatic Nostoc sp. strain 152. The dominant microcystin produced by Nostoc sp. strain IO-102-I was the highly toxic [ADMAdda5]microcystin-LR, which accounted for ca. 80% of the total microcystins. We assigned a structure of [DMAdda5]microcystin-LR and [d-Asp3,ADMAdda5]microcystin-LR and a partial structure of three new [ADMAdda5]-XR type of microcystin variants. Interestingly, Nostoc spp. strains IO-102-I and 152 synthesized only the rare ADMAdda and DMAdda subfamilies of microcystin variants. Phylogenetic analyses demonstrated congruence between genes involved directly in microcystin biosynthesis and the 16S rRNA and rpoC1 genes of Nostoc sp. strain IO-102-I. Nostoc sp. strain 152 and the Nostoc sp. strain IO-102-I are distantly related, revealing a sporadic distribution of toxin production in the genus Nostoc. Nostoc sp. strain IO-102-I is closely related to Nostoc punctiforme PCC 73102 and other symbiotic Nostoc strains and most likely belongs to this species. Together, this suggests that other terrestrial and aquatic strains of the genus Nostoc may have retained the genes necessary for microcystin biosynthesis.