To conserve freshwater resources, domestic and industrial wastewater is recycled. Algal systems have emerged as an efficient, low-cost option for treatment (phycoremediation) of nutrient-rich wastewater and environmental protection. However, industrial wastewater may contain growth inhibitory compounds precluding algal use in phycoremediation. Therefore, extremophyte strains, which thrive in hostile environments, are sought-after. Here, we isolated such an alga - a strain of Synechocystis sp. we found to be capable of switching from commensal exploitation of the nitrogen-fixing Trichormus variabilis, for survival in nitrogen-deficient environments, to free-living growth in nitrate abundance. In nitrogen depletion, the cells are tethered to polysaccharide capsules of T. variabilis using nanotubular structures, presumably for nitrate acquisition. The composite culture failed to establish in industrial/domestic waste effluent. However, gradual exposure to increasing wastewater strength over time untethered Synechocystis cells and killed off T. variabilis. This switched the culture to a stress-acclimated monoculture of Synechocystis sp., which rapidly grew and flourished in wastewater, with ammonium and phosphate removal efficiencies of 99.4% and 97.5%, respectively. Therefore, this strain of Synechocystis sp. shows great promise for use in phycoremediation, with potential to rapidly generate biomass that can find use as a green feedstock for valuable bio-products in industrial applications.