Cyan fluorescent proteins (CFPs), such as Cerulean, are widely used as donor fluorophores in Förster resonance energy transfer (FRET) experiments. Nonetheless, the most widely used variants suffer from drawbacks that include low quantum yields and unstable flurorescence. To improve the fluorescence properties of Cerulean, we used the X-ray structure to rationally target specific amino acids for optimization by site-directed mutagenesis. Optimization of residues in strands 7 and 8 of the β-barrel improved the quantum yield of Cerulean from 0.48 to 0.60. Further optimization by incorporating the wild-type T65S mutation in the chromophore improved the quantum yield to 0.87. This variant, mCerulean3, is 20% brighter and shows greatly reduced fluorescence photoswitching behavior compared to the recently described mTurquoise fluorescent protein in vitro and in living cells. The fluorescence lifetime of mCerulean3 also fits to a single exponential time constant, making mCerulean3 a suitable choice for fluorescence lifetime microscopy experiments. Furthermore, inclusion of mCerulean3 in a fusion protein with mVenus produced FRET ratios with less variance than mTurquoise-containing fusions in living cells. Thus, mCerulean3 is a bright, photostable cyan fluorescent protein which possesses several characteristics that are highly desirable for FRET experiments.