Cyanobacteria have gained a lot of attention in recent years because of their potential applications in biotechnology. We present an overview of the literature describing the uses of cyanobacteria in industry and services sectors and provide an outlook on the challenges and future prospects of the field of cyanobacterial biotechnology. Cyanobacteria have been identified as a rich source of biologically active compounds with antiviral, antibacterial, antifungal and anticancer activities. Several strains of cyanobacteria were found to accumulate polyhydroxyalkanoates, which can be used as a substitute for nonbiodegradable petrochemical-based plastics. Recent studies showed that oil-polluted sites are rich in cyanobacterial consortia capable of degrading oil components. Cyanobacteria within these consortia facilitated the degradation processes by providing the associated oil-degrading bacteria with the necessary oxygen, organics and fixed nitrogen. Cyanobacterial hydrogen has been considered as a very promising source of alternative energy, and has now been made commercially available. In addition to these applications, cyanobacteria are also used in aquaculture, wastewater treatment, food, fertilizers, production of secondary metabolites including exopolysaccharides, vitamins, toxins, enzymes and pharmaceuticals. Future research should focus on isolating new cyanobacterial strains producing high value products and genetically modifying existing strains to ensure maximum production of the desired products. Metagenomic libraries should be constructed to discover new functional genes that are involved in the biosynthesis of biotechnological relevant compounds. Large-scale industrial production of the cyanobacterial products requires optimization of incubation conditions and fermenter designs in order to increase productivity.