Microbialites are mineral formations formed by microbial communities that are often dominated by cyanobacteria. Carbonate microbialites, known from Proterozoic times through the present, are recognized for sequestering globally significant amounts of inorganic carbon. Recent ecological work has focused on microbial communities dominated by cyanobacteria that produce microbial mats and laminate microbialites (stromatolites). However, the taxonomic composition and functions of microbial communities that generate distinctive clotted microbialites (thrombolites) are less well understood. Here, microscopy and deep shotgun sequencing were used to characterize the microbiome (microbial taxa and their genomes) associated with a single cyanobacterial host linked by 16S sequences to Nostoc commune Vaucher ex Bornet & Flahault, which dominates abundant littoral clotted microbialites in shallow, subpolar, freshwater Laguna Larga in southern Chile. Microscopy and energy-dispersive X-ray spectroscopy suggested the hypothesis that adherent hollow carbonate spheres typical of the clotted microbialite begin development on the rigid curved outer surfaces of the Nostoc balls. A surface biofilm included >50 nonoxygenic bacterial genera (taxa other than Nostoc) that indicate diverse ecological functions. The Laguna Larga Nostoc microbiome included the sulfate reducers Desulfomicrobium and Sulfospirillum and genes encoding all known proteins specific to sulfate reduction, a process known to facilitate carbonate deposition by increasing pH. Sequences indicating presence of nostocalean and other types of nifH, nostocalean sulfide:ferredoxin oxidoreductase (indicating anoxygenic photosynthesis), and biosynthetic pathways for the secondary products scytonemin, mycosporine, and microviridin toxin were identified. These results allow comparisons with microbiota and microbiomes of other algae and illuminate biogeochemical roles of ancient microbialites.