<jats:p>The sensory rhodopsin from Anabaena (Nostoc) sp. PCC7120 is the first cyanobacterial retinylidene protein identified. Here, we report on NosACO (Nostoc apo-carotenoid oxygenase), encoded by the ORF (open reading frame) all4284, as the candidate responsible for the formation of the required chromophore, retinal. In contrast with the enzymes from animals, NosACO converts β-apo-carotenals instead of β-carotene into retinal in vitro. The identity of the enzymatic products was proven by HPLC and gas chromatography–MS. NosACO exhibits a wide substrate specificity with respect to chain lengths and functional end-groups, converting β-apo-carotenals, (3R)-3-hydroxy-β-apo-carotenals and the corresponding alcohols into retinal and (3R)-3-hydroxyretinal respectively. However, kinetic analyses revealed very divergent Km and Vmax values. On the basis of the crystal structure of SynACO (Synechocystis sp. PCC6803 apo-carotenoid oxygenase), a related enzyme showing similar enzymatic activity, we designed a homology model of the native NosACO. The deduced structure explains the absence of β-carotene-cleavage activity and indicates that NosACO is a monotopic membrane protein. Accordingly, NosACO could be readily reconstituted into liposomes. To localize SynACO in vivo, a Synechocystis knock-out strain was generated expressing SynACO as the sole carotenoid oxygenase. Western-blot analyses showed that the main portion of SynACO occurred in a membrane-bound form.