Mycosporine-like amino acids (MAAs) are considered an important and unique UV-absorbing biomolecules. The present study was intended to explore the occurrence, UV-induction, free radical scavenging potential and photoprotective function of MAAs in the cyanobacterium, Euhalothece sp.WR7. High-performance liquid chromatography (HPLC) coupled with photodiode-array (PDA) detection studies revealed the occurrence of two different UV-absorbing compounds having absorption maxima at 331 nm and 362 nm with retention time 6.4 and 10.2 min, respectively. Based on the HPLC-PDA detection and ion trap liquid chromatography-mass spectrometry (LC-MS) analysis, the compounds were identified as mycosporine-2-Glycine (M2G: λmax 331 nm, m/z 303) and Euhalothece-362 (E-362: λmax 362 nm, m/z 331). Compared to the photosynthetically active radiation, a substantial induction of the synthesis of both MAAs was observed under UV (UV-A + UV-B) stress condition. MAAs (M2G + E-362) showed significant free radical scavenging potential in a dose-dependent manner. It also exhibited efficient photoprotective function by diminishing the UV-induced generation of reactive oxygen species (ROS) and enhancing the survival of Escherichia coli cells under UV-B stress. The results indicate the dynamic role of MAAs in existence and viability of cyanobacterium by regulating the key ecological functions in a harsh environment with intense solar UV irradiances. Moreover, MAAs may be used as important UV absorbers in cosmetic sunscreens due to their strong photoprotective function.