Abstract: This paper was conducted to study the effect of water on physiological activity of Nostoc flagelliforme Born.et Flah. Results indicated that: Respiration, photosynthesis and nitrogen fixation were recovery in turn. Following water content increasing, photosynthesis and nitrogen fixation increased and respiration decreased. Physiological activity was recovery thoroughly when content of free water was 8 times of bound water. During rewetting samples kept in dessicator to lose water, respiration decreased following water loss, but photosynthesis and nitrogenase activity increased at the time that water lose rate was under 40%, then decreased with water loss. The results proved water is a limiting factor to N. flagelliforme and optimal water will help to normal physiological activity and growth.