Aeroterrestrial filamentous green algae of the genus Klebsormidium (Klebsormidiales, Streptophyta) are typical components of biological soil crusts, which occur worldwide in arid and semiarid habitats including alpine regions. In the present study, Klebsormidium crenulatum (Kütz.) Lokhorst was isolated from an alpine soil crust above the timberline of the Austrian Alps. Growth responses, photosynthetic performance, and desiccation tolerance were measured under controlled laboratory conditions. K. crenulatum exhibited optimal growth and the highest photosynthetic efficiency under relatively low photon fluence densities (30 and 21.9 μmol photons · m−2 · s−1, respectively), indicating low-light requirements. It grew in a narrow range of salinities between 1.2 and 15 practical salinity units (psu), pointing to a pronounced stenohaline response pattern. Increasing temperatures from 5°C to 40°C led to different effects on photosynthetic oxygen evolution and respiratory oxygen consumption in K. crenulatum. While at low temperatures (5°C–10°C) photosynthesis was relatively high, respiration was not detectable or was at a very low level. Conversely, at the highest temperature of 40°C, photosynthesis was inhibited, and respiration unaffected, indicating strong differences in temperature sensitivity between both physiological processes. K. crenulatum was capable of photosynthesizing efficiently for up to 2.5 h under desiccation, followed by a decrease to 15% of the initial value after 3 h. Complete recovery took place within 2 h after rehydration. All ecophysiological data explain the widespread abundance of K. crenulatum in soil crusts of the alpine regions of the European Alps.