The content of the blue-green alga phycobiont, Nostoc sp. in the lichen Peltigera canina has been estimated using various techniques and represents on average 2.7% of the total thallus nitrogen. Expressed in terms of cell numbers, this represents approximately 3 × 106 cells cm2, mature thallus. The nitrogenase activity, expressed as nil ethylene evolved/minute/mg Sostoc protein, varies considerably with the thallus sample, but a mean value of 10, considerably greater than that in free-living Nostoc, has been found. The nitrogenase activity of the algal cells is particularly sensitive to disturbance of the thallus structure and the implications of these findings are discussed.