A novel thin-layer biocatalyst for photosynthetic N2 fixation and H2 photoproduction was assembled using a Ca2+-alginate matrix and heterocysts isolated from wild-type Anabaena sp. PCC 7120 filaments. Compared to suspension heterocysts, heterocysts entrapped in Ca2+-alginate films showed improved stability of the nitrogenase system. While suspension heterocysts lost nitrogenase activity within 24 h, immobilized heterocysts supported nitrogenase activity for up to 125 h. The maximum specific rate of acetylene reduction was the same in both cases (∼0.4 μmol C2H2 mg Chl−1 h−1), but the catalyst with entrapped heterocysts required a much longer time to achieve the maximum rate (60 h instead of 3 h in suspension). Simultaneously with acetylene reduction, the immobilized heterocysts were able to photoproduce H2 for 125 h, yielding up to 1.1 mmol H2 mg Chl−1. The absence of acetylene increased the H2 photoproduction rate to a maximum of 25–30 μmol H2 mg Chl−1 h−1, and the catalyst was capable of H2 photoproduction for 190 h, yielding up to 2.5 mmol H2 mg Chl−1. The recovery of the catalyst with entrapped heterocysts was achieved through placing the cells in a N2 atmosphere for 24 h. This engaged a second cycle of H2 photoproduction, which lasted for another 240 h (10 days), thus yielding ∼3 mmol H2 mg Chl−1 in total after 454 h. Together, these findings demonstrate great potential for a heterocyst-based thin-layer platform for the sustainable production of chemicals and biofuels.