The lichen Peltigera malacea collected from Pynursula, East Khasi Hill district, Shillong, Meghalaya, India, situated at N: 25° 82’ 9.6” E: 92° 6’ 43” at an altitude of 1425 m above sea level was investigated. Morphological and ultrastructural studies showed the presence of a cyanobacterium Nostoc calcicola just below the upper cortex of the lichen thallus and in contact with the fungi. Biochemical analysis proved this symbiosis to be a bipartite, where the heterocyst frequency of the cyanobiont is similar to its free-living form. The nitrogen fixing enzyme nitrogenase showed a comparative result between the cyanobiont and its free-living form. Highly repressed glutamine synthetase (GS) activity was found in the cyanobiont. Glutamine dehydrogenase (GDH) activity was high in the lichen indicating GDH is the main ammonia assimilating enzyme. Protection of nitrogenase activity was also observed in the cyanobiont when treated with ammonia where the nitrogenase activity was sustained for a period of 24 h, but this was not the case in the free-living cyanobacteria. In the dark, nitrogenase activity of the cyanobiont was seen even after 24 h, almost 30% of the activity still remains which is not the case with its free-living form where the activity is depleted within 12 h. Phycobiliprotein spectra showed the presence of only one peak corresponding to phycoerythrin (PE) in the cyanobiont and the presence of three distinct peaks in its free-living form corresponding to phycoerythrin (PE), phycocyanin (PC) and allophycocyanin (APC). Keywords: Peltigera malacea · Nostoc calcicola · Nitrogenase activity · Bipartite lichens.