The increasing need to replace oil-based products and to address global climate change concerns has triggered considerable interest in photosynthetic microorganisms. Cyanobacteria, in particular, have great potential as biocatalysts for fuels and fine-chemicals. During the last few years the biotechnological applications of cyanobacteria have experienced an unprecedented increase and the use of these photosynthetic organisms for chemical production is becoming a tangible reality. However, the field is still immature and many concerns about the economic feasibility of the biotechnological potential of cyanobacteria remain. In this review we describe recent successes in biofuel and fine-chemical production using cyanobacteria. We discuss the role of the photosynthetic metabolism and highlight the need for systems-level metabolic optimization in order to achieve the true potential of cyanobacterial biocatalysts.