The toxin producing nitrogen-fixing heterocystous freshwater cyanobacterium Cylindrospermopsis raciborskii recently radiated from its endemic tropical environment into sub-tropical and temperate regions, a radiation likely to be favored by its ability to fix dinitrogen (diazotrophy). Although most heterocystous cyanobacteria differentiate regularly spaced intercalary heterocysts along their trichomes when combined nitrogen sources are depleted, C. raciborskii differentiates only two terminal heterocysts (one at each trichome end) that can reach >100 vegetative cells each. Here we investigated whether these terminal heterocysts are the exclusive sites for dinitrogen fixation in C. raciborskii. The highest nitrogenase activity and NifH biosynthesis (western-blot) were restricted to the light phase of a 12/12 light/dark cycle. Separation of heterocysts and vegetative cells (sonication and two-phase aqueous polymer partitioning) demonstrated that the terminal heterocysts are the sole sites for nifH expression (RT-PCR) and NifH biosynthesis. The latter finding was verified by the exclusive localization of nitrogenase in the terminal heterocysts of intact trichomes (immunogold-transmission electron microscopy and in situ immunofluorescence-light microscopy). These results suggest that the terminal heterocysts provide the combined nitrogen required by the often long trichomes (>100 vegetative cells). Our data also suggests that the terminal-heterocyst phenotype in C. raciborskii may be explained by the lack of a patL ortholog. These data help identify mechanisms by which C. raciborskii and other terminal heterocyst-forming cyanobacteria successfully inhabit environments depleted in combined nitrogen.