Serine hydroxymethyltransferase (SHMT) is a key enzyme in cellular one-carbon pathway and has been studied in many living organisms from bacteria to higher plants and mammals. However, biochemical and molecular characterization of SHMT from photoautotrophic microorganisms remains a challenge. Here, we isolated the SHMT gene from a halotolerant cyanobacterium Aphanothece halophytica (ApSHMT) and expressed it in Escherichia coli. Purified recombinant ApSHMT protein exhibited catalytic reactions for dl-threo-3-phenylserine as well as for l-serine. Catalytic reaction for l-serine was strongly inhibited by NaCl, but not to that level with glycine betaine. Overexpression of ApSHMT in E. coli resulted in the increased accumulation of glycine and serine. Choline and glycine betaine levels were also significantly increased. Under high salinity, the growth rate of ApSHMT-expressing cells was faster compared to its respective control. High salinity also strongly induced the transcript level of ApSHMT in A. halophytica. Our results indicate the importance of a novel pathway; salt-induced ApSHMT increased the level of glycine betaine via serine and choline and conferred the tolerance to salinity stress.