The presence of Nostoc in longitudinally oriented schizogenous canals is a feature that separates Leiosporoceros from all other hornworts and represents a novel symbiotic arrangement in land plants. In surface view, Nostoc canals are visible as elongated, dichotomously branched blue-green strands. All other hornworts develop numerous discrete globose colonies through continuous production of mucilage clefts as avenues for multiple invasions within a single thallus. To elucidate the anatomy and development of the unusual Nostoc strands in Leiosporoceros, we examined sporeling development in culture and the structure of strands in field-collected plants using light and electron microscopy. Rosette-like sporelings have mucilage clefts scattered along swollen apices. All field specimens were strap-shaped, contained Nostoc, and lacked mucilage clefts. Nostoc strands are located in the center of the thallus and develop behind the apical cell by separation of the middle lamella between apical derivatives. Strands elongate and branch in synchrony with apical growth, and thus only a single invasion is required for strand production. Two distinct ultrastructural morphotypes in the collections suggest nonspecificity of Nostoc. We speculate that Nostoc enters the thallus in the sporeling stage through mucilage clefts, and once colonies are established, cleft production ceases.