Nitrogen is a limiting nutrient for photosynthetic productivity. Yet biological nitrogen fixation which transforms abundant atmospheric nitrogen to bioavailable ammonia is largely restricted to bacteria. Epithemia spp. diatoms contain obligate, nitrogen-fixing endosymbionts, or 'diazoplasts', derived from cyanobacteria. They represent rare photosynthetic eukaryotes that have successfully coupled oxygenic photosynthesis with oxygen-sensitive nitrogenase activity. Here, we report a newly-isolated species, E. clementina, as a model to investigate endosymbiotic acquisition of this critical biological function. To detect the metabolic changes associated with endosymbiotic specialization, we compared nitrogen fixation, nitrogen utilization, and their regulatory pathways in the Epithemia diazoplast with its close free-living cyanobacteria relative, Crocosphaera subtropica. Unlike C. subtropica, we show that nitrogenase activity in the diazoplast is concurrent with, and even dependent on, host photosynthesis. In contrast to its expanded nitrogen-fixing activity, the diazoplast has diminished ability to utilize alternative nitrogen sources. Finally, while key regulators of nitrogen metabolism are retained in the diazoplast genome, we observed a conserved negative feedback regulation of nitrogen fixation to ammonium, but paradoxical nitrogen assimilation responses in the diazoplast compared with C. subtropica. Our results suggest key adaptations that facilitated the transition from free-living to endosymbiotic specialist diazotroph, including import of host carbohydrates, streamlined carbon catabolism favoring high respiratory rates, and altered nitrogen regulation to favor nitrogen transfer to the host. Elucidating how photosynthesis and nitrogen fixation are coupled in a eukaryotic cell has important implications for bioengineering nitrogen-fixing crop plants for sustainable agriculture.