We investigated the biochemical properties of the enzymes involved in trehalose metabolism in the cyanobacterium Nostoc punctiforme strain IAM M-15 to elucidate the mechanism of trehalose accumulation in response to desiccation and salt stress. There was no detectable trehalose in fully hydrated N. punctiforme cells; however, these cells accumulated trehalose upon desiccation. Moreover, NaCl treatment also induced trehalose accumulation. The three genes for trehalose metabolism, treZ (maltooligosyltrehalose trehalohydrolase, Mth), treY (maltooligosyltrehalose synthase, Mts), and treH (trehalase), were found as a gene cluster, and the mRNAs for these genes were detectable at similar levels during desiccation. Trehalase of N. punctiforme was heterologously expressed in E. coli cells in an active form with a molecular mass of 52 kDa. Trehalase activity was strongly inhibited in the presence of 10 mM NaCl while trehalose synthesis activity remained active in the presence of salt. These data suggest that the rate of trehalose production exceeds that of trehalose hydrolysis under water-stress conditions characterized by increased cellular solute concentrations. In the proposed mechanism, control of trehalase plays an important role in trehalose accumulation in terrestrial cyanobacteria under conditions of extreme desiccation.