To verify the hypothesis that cyanobacteria naturally biosynthesising polyphenolic compounds possess an active enzymatic system that enables them to transform these substances, such an ability of the biocatalytic systems of whole cells of these biota was assessed for the first time. One halophilic strain and seven freshwater strains of cyanobacteria representing four of the five taxonomic orders of Cyanophyta were examined to determine the following: (i) whether they contain polyphenols, including flavonoids; (ii) the resistance of their cultures when suppressed by the presence of exogenous hydroxychalcones—precursors of flavonoid biosynthesis and (iii) whether these photoautotrophs can transform hydroxylated chalcones. All examined strains were found to contain polyphenols and flavonoids, and the growth of their cultures was inhibited in the presence of 2′-hydroxychalcone, 2″-hydroxychalcone and 4″-hydroxychalcone. We also confirmed that the examined cyanobacteria transformed hydroxychalcones via hydrogenative bio-reduction and formed the corresponding hydroxydihydro derivatives with yields above 90% whenever the substrates were bioavailable for such a conversion. Moreover, we observed that the routes and efficiency of biohydrogenation (and hydroxylation) of chalcones were dependent on the location of the hydroxyl substituent. The final products obtained as the results of biotransformations were extracted from the media and identified by mass spectrometry (LC-MS/MS) and nuclear magnetic resonance (1H NMR, 13C NMR, COSY, HSQC). Based on those results, we believe that the very efficient biohydrogenation of hydroxychalcones, which may easy be scaled up for biotechnological purposes, reflects the natural activity of the cyanobacterial defence system, because hydroxydihydrochalcones were less active inhibitors of the growth of cyanobacterial cultures than the corresponding substrates.