Cylindrospermopsis raciborskii is a filamentous, potentially toxic bloom-forming cyanobacterium in tropical and temperate freshwaters. We compared the cylindrospermopsin (CYN) producing C. raciborskii strain CS-505 (Australia) against a PSP toxin producing strain D9 (Brazil), originally identified as conspecific. Cylindrospermopsis raciborskii forms a monophyletic group comprising identities >99% for the 16S rRNA gene, whereas strains D9 and CS-505 are 99.7% similar. We sequenced the complete genome of these strains, the first for any PSP- or CYN-toxin producing cyanobacterium. The genome sizes are the smallest known for filamentous cyanobacteria (3.3 and 3.9 Mbp for D9 and CS-505, respectively), but exhibit an apparently large size difference. Genome comparison yielded 471 and 801 strain-specific genes for D9 and CS-505, respectively, and revealed remarkable differences between strains. These differences are mainly related to signatures for high genomic plasticity in CS-505, gene loss in D9 (such as the lack of nitrogen fixation genes), and genes for secondary metabolite production, specifically in the STX and CYN clusters. Functional analysis via gene expression studies using microarrays and qPCR have supported the function of the identified toxin-related gene clusters as well as indicating fundamental differences in phenotypic expression between the strains.