The family Hapalosiphonaceae is grouped under subsection IV complying with International Code of Nomenclature for algae, fungi, and plants (ICN). This is a complex taxonomic group with often overlapping morphological traits. The members of this group have heterogeneous habitats and need urgent attention for de-entangling the taxon. The genome comparisons among 44 high quality drafts belonging to Hapalosiphonaceae suggests the presence of three distinct groups, one largely dominated by thermophiles (Group 1) and the other comprising of members of diverse habitats (Group 2). The third group is small with only 2 representative members (Group 3) are considered as outliers. The group containing members of diverse habitats are characterized by the presence of higher number of ORFan genes, mobilome and secondary metabolites genes. The thermophiles belonging to Group 1 are characterized by compact genome whereas the Group 2 genomes having diverse ecological habitat show genome expansion possibly due to recent acquisition. Comparison of synonymous and non-synonymous substitution of conserved genes suggest, members of Group 2 are undergoing relaxed purifying selection. There is a significant increase in the number of core genes (2075 for n = 35) when Group 1 organisms are considered alone compared to only 46 core genes when all three groups are taken together (n = 44). The presence of a huge pan genome (47,756) and a relatively tiny core genome (46) suggests that the taxon is an open and expanding. Members of Group 2 are distinct in coding for commercial metabolite shinorine that was visibly absent from other members of the Hapalosiphonaceae. Our RNAseq investigations on Mastigocladus laminosus UU774, a candidate of Group 2, showed that metabolic clusters overexpressed during stress. UU774 metabolic extracts shown potential antibacterial and anticancer cell line activity.