Lichen extinction occurs at rapid rates as a result of human activity, although species could potentially be rescued by conservation management based on ecophysiological knowledge. The boreal old forest cyanolichen Erioderma pedicellatum currently occurs in few sites worldwide. To protect it from extinction, it is essential to learn more about it. The last remaining good European site is a canyon with a waterfall, in a low- rainfall region of Norway. Here, a spatially restricted population of 1500–2000 thalli dominates the epiphytic vegetation of a small number of Picea abies canopies. We were able to document that 1) E. pedicellatum grew on thin branches with higher bark pH than is normal for P. abies in a canyon that provided an unusual combination of very high light, high air humidity, and cool temperatures in the growing season. However, the species did not inhabit the main waterfall spray zone. 2) Erioderma pedicellatum had a high light saturation point, high CO2 uptake at high light (≥ 600 μmol m−2 s−1) and cool temperatures (5–20 °C), and experienced strong suprasaturation depression of photosynthesis when fully hydrated. 3) It showed good tolerance of desiccation and high light; it was slightly more tolerant than the morphologically similar, but more common cyanolichen Pectenia plumbea. 4) The European population in its sunny habitat had higher water holding capacity than previously recorded in slightly shaded rainforest populations in Newfoundland, consistent with acclimation to compensate for high evaporative demands. Understanding the ecological niche and responses to critical environmental factors is essential for action plans to avoid extinction of E. ped- icellatum. Methods used in this study could also be applicable for ecological understanding of other threatened lichen species. bark pH, CO2 uptake, desiccation tolerance, ecophysiology, hydration traits, Pectenia plumbea