The aerobic nitrogen-fixing cyanobacterium, Cyanothece sp. BH68K produces non-mucoid variants defective in exopolysaccharide (EPS) production at a high frequency. The EPS-producing wild-type colonies (EPS(+)) have a characteristic smooth and shiny appearance which allows them to be easily distinguished from the EPS(-) variants. When grown on agar plates lacking a source of combined nitrogen, the EPS(-) variants exhibited a yellow phenotype typical of nitrogen starvation. These EPS(-) variants showed varying degrees of reversion back to the EPS(+) phenotype. After reversion, they exhibited normal diazotrophic growth on agar plates. Alcian blue and ruthenium red staining indicated that the EPS is an acidic polysaccharide, which is present as a loose network around the cell, and which can be completely removed by low speed centrifugation. The accumulation of EPS takes place mainly during the stationary phase. All EPS(-) variants failed to produce any EPS. Analysis of growth of wild-type and EPS(-) variants revealed that EPS production is beneficial for diazotrophic growth on solid medium, but not in liquid medium. In addition, EPS phenotypic alteration may have some advantage in the dispersal of cells from one place to another in the natural environment.