Fatty acids are important molecules in bioenergetics and also in industry. The phylum Cyanobacteria consists of a group of prokaryotes that typically carry out oxygenic photosynthesis with water as an electron donor and use carbon dioxide as a carbon source to generate a range of biomolecules, including fatty acids. They are also able to import exogenous free fatty acids and direct them to biosynthetic pathways. Here, we review current knowledge on mechanisms and regulation of free fatty acid transport into cyanobacterial cells, their subsequent activation and use in the synthesis of fatty acid-containing biomolecules such as glycolipids and alka(e)nes, as well as recycling of free fatty acids derived from such molecules. This review also covers efforts in the engineering of such cyanobacterial fatty acid-associated pathways en route to optimized biofuel production.