Photosynthesis in lichens is intimately linked to the photosynthetic capacities of the photobiont, i.e. autotrophic algae and cyanobacteria, that form the lichen association together with a fungal partner. Lichen photosynthesis in nature is also affected by a complex mixture of internal and external factors. Intrathalline locatization of photobiont cells, structure of photobiont layer, functional photobiont-mycobiont interlink, and physico-chemical properties of the fungal part of thallus are considered important internal characteristics affecting photosynthesis and utilization of photosynthetic products in lichens. In this chapter, a brief introduction into the anatomy and morphology is provided from a view point of function. Special attention is given to cellular structure of photobionts, and especially to the chloroplast of unicellular alga Trebouxia, the most abundant symbiotic alga in lichen association. Since lichens are typical poikilohydric organism with no active control of their hydration status, the photosynthetic responses of lichens to full, partial and severely limited water supply are described. In addition the protective mechanisms activated during thallus desiccation is discussed. Several aspects of lichen photosynthesis including light-response curves, photoinhibition, activation of photoprotective mechanisms and reactive oxygen speciesinduced changes in the amount and activity of antioxidative substances are reviewed. Lichens can photosynthesize over a wide temperature range, including subzero temperature. The photobiont also exhibits response depending on nitrogen availability and exposure to heavy metals.