Upon depletion of Sll0254 in Synechocystis sp. strain PCC 6803, cyclized carotenoids were replaced by linear, relatively hydrophilic carotenoids, and the amount of the two photosystems decreased greatly. Full segregants of the sll0254 deletion in Synechocystis were not obtained, implying that this gene is essential for survival, most likely to allow normal cell division. The N-terminal half of Sll0254 has limited similarity to the family of lycopene cyclases, has an additional dehydrogenase motif near the N terminus, and is followed by a Rieske 2Fe-2S center sequence signature. To test whether Sll0254 serves as a lycopene cyclase in Synechocystis, the corresponding gene was expressed in Escherichia coli strains that can produce lycopene or neurosporene. In the presence of Sll0254 these linear carotenoids were converted into cyclized, relatively hydrophilic pigments, with masses consistent with the introduction of two hydroxyl groups and with spectra indicative of only small changes in the number of conjugated double bonds. This suggests that Sll0254 catalyzes formation of oxygenated, cyclized carotenoids. We interpret the appearance of the hydroxyl groups in the carotenoids to be due to dioxygenase activity involving the Rieske 2Fe-2S center and the additional dehydrogenase domain. This dioxygenase activity is required in the myxoxanthophyll biosynthesis pathway, after or concomitant with cyclization on the other end of the molecule. We interpret Sll0254 to be a dual-function enzyme with both lycopene cyclase and dioxygenase activity and have named it CrtL(diox).