The genomes of two closely related thermophilic cyanobacterial isolates, designated Synechococcus isolate OS-A and Synechococcus isolate OS-B', from the microbial mats of Octopus Spring (Yellowstone National Park) have been sequenced. An extensive suite of genes that are controlled by phosphate levels constitute the putative Pho regulon in these cyanobacteria. We examined physiological responses of an axenic OS-B' isolate as well as transcript abundances of Pho regulon genes as the cells acclimated to phosphorus-limiting conditions. Upon imposition of phosphorus deprivation, OS-B' stopped dividing after three to four doublings, and absorbance spectra measurements indicated that the cells had lost most of their phycobiliproteins and chlorophyll a. Alkaline phosphatase activity peaked and remained high after 48 h of phosphorus starvation, and there was an accumulation of transcripts from putative Pho regulon genes. Interestingly, the genome of Synechococcus isolate OS-B' harbors a cluster of phn genes that are not present in OS-A isolates. The proteins encoded by the phn genes function in the transport and metabolism of phosphonates, which could serve as an alternative phosphorus source when exogenous phosphate is low. The phn genes were upregulated within a day of eliminating the source of phosphate from the medium. However, the ability of OS-B' to utilize methylphosphonate as a sole phosphorus source occurred only after an extensive period of exposure to the substrate. Once acclimated, the cells grew rapidly in fresh medium with methylphosphonate as the only source of phosphorus. The possible implications of these results are discussed with respect to the ecophysiology of the microbial mats.