Cyanobacteria are N<latex>$_2$</latex>-fixing oxygenic phototrophs with potential as sources of nitrogenous biofertilizer independent of fossil fuels. Recently, attention has been paid to their role in this respect, and to strain selection to facilitate enhanced agricultural productivity. The capacities to fix N<latex>$_2$</latex> in the presence of combined nitrogen, to resist herbicides and to tolerate salinity changes and desiccation are of particular importance. Mutant strains of N<latex>$_2$</latex>-fixing cyanobacteria with potential applications have been produced, including strains which photoproduce ammonia and amino acids, strains with altered transport systems and strains which are herbicide-resistant. By using bioreactors and immobilization systems in conjunction with these strains, techniques have been developed for extracellular product-liberation. Gene transfer systems are now available in both unicellular and filamentous cyanobacteria and these offer the possibility of strain selection and modification. The way in which these advances will contribute to the development of strains with desirable attributes for use in the field is discussed.