Microcystins are potent hepatotoxins predominantly produced by bloom-forming freshwater cyanobacteria (e.g., Microcystis, Planktothrix, Dolichospermum). Microcystin biosynthesis involves large multienzyme complexes and tailoring enzymes encoded by the mcy gene cluster. Mutation, recombination, and deletion events have shaped the mcy gene cluster in the course of evolution, resulting in a large diversity of microcystin congeners and the natural coexistence of toxic and non-toxic strains. The biological functions of microcystins and their association with algal bloom formation have been extensively investigated over the past decades. This review synthesizes recent advances in decoding the biological role of microcystins in carbon/nitrogen metabolism, antioxidation, colony formation, and cell-to-cell communication. Microcystins appear to adopt multifunctional roles in cyanobacteria that reflect the adaptive plasticity of toxic cyanobacteria to changing environments.