ABSTRACT Heterocysts, formed when filamentous cyanobacteria, such as Anabaena sp. strain PCC 7120, are grown in the absence of combined nitrogen, are cells that are specialized in fixing atmospheric nitrogen (N 2 ) under oxic conditions and that transfer fixed nitrogen to the vegetative cells of the filament. Anabaena sp. mutants whose sepJ gene (open reading frame alr2338 of the Anabaena sp. genome) was affected showed filament fragmentation and arrested heterocyst differentiation at an early stage. In a sepJ insertional mutant, a layer similar to a heterocyst polysaccharide layer was formed, but the heterocyst-specific glycolipids were not synthesized. The sepJ mutant did not exhibit nitrogenase activity even when assayed under anoxic conditions. In contrast to proheterocysts produced in the wild type, those produced in the sepJ mutant still divided. SepJ is a multidomain protein whose N-terminal region is predicted to be periplasmic and whose C-terminal domain resembles an export permease. Using a green fluorescent protein translationally fused to the carboxyl terminus of SepJ, we observed that in mature heterocysts and vegetative cells, the protein is localized at the intercellular septa, and when cell division starts, it is localized in a ring whose position is similar to that of a Z ring. SepJ is a novel composite protein needed for filament integrity, proper heterocyst development, and diazotrophic growth.