A novel endolithic microbial habitat is described from a climatically extreme site at Two Step Cliffs, Alexander Island, Antarctic Peninsula (71 degrees 54'S, 68 degrees 13'W). Small endolithic colonies (<3 mm in diameter) are found within the translucent gypsum crust that forms on the surface of sandstone boulders. Gypsum crusts are found on ice-free rocks throughout the Antarctic and therefore offer potential colonization sites at more inhospitable locations, including sites at higher latitudes. Cyanobacterial, bacterial and fungal components were cultured from the crust material and have been identified as Chloroglea sp., Sphingomonas sp. and Verticillium sp. respectively. A non-cultured, black-pigmented fungus was also found. Cyanobacterial primary productivity is low: at depths of 1.2 and 2.5 mm within the crust, estimates of possible cell divisions per year were < 38 and four respectively. This microniche is proposed to provide protection from desiccation, rapid temperature variation and UV radiation flux while allowing penetration of photosynthetically active radiation (PAR) for utilization by phototrophs. The endolithic communities are less extensive than those of the Dry Valleys, continental Antarctica, probably owing to only recent deglaciation (<7000 year ago).