Desert is one of the harshest environments on the planet, characterized by exposure to daily fluctuations of extreme conditions (such as high temperature, low nitrogen, low water, high salt, etc.). However, some cyanobacteria are able to live and flourish in such conditions, form communities, and facilitate survival of other organisms. Therefore, to ensure survival, desert cyanobacteria must develop sophisticated and comprehensive adaptation strategies to enhance their tolerance to multiple simultaneous stresses. In this review, we discuss the metabolic pathways used by desert cyanobacteria to adapt to extreme arid conditions. In particular, we focus on the extracellular polysaccharides and compatible solutes biosynthesis pathways and their evolution and special features. We also discuss the role of desert cyanobacteria in the improvement of soil properties and their ecological and environmental impact on soil communities. Finally, we summarize recent achievements in the application of desert cyanobacteria to prevent soil erosion and desertification.