Maintaining the structural integrity of the photosynthetic apparatus during dehydration is critical for effective recovery of photosynthetic activity upon rehydration in a variety of desiccation-tolerant plants, but the underlying molecular mechanism is largely unclear. The subaerial cyanobacterium Nostoc flagelliforme can survive extreme dehydration conditions and quickly recovers its photosynthetic activity upon rehydration. In this study, we found that the expression of the molecular chaperone NfDnaK2 was substantially induced by dehydration, and NfDnaK2 proteins were primarily localized in the thylakoid membrane. NfDnaJ9 was identified to be the cochaperone partner of NfDnaK2, and their encoding genes shared similar transcriptional responses to dehydration. NfDnaJ9 interacted with the NfFtsH2 protease involved in the degradation of damaged D1 protein. Heterologous expression of NfdnaK2 enhanced PSII repair and drought tolerance in transgenic Nostoc sp. PCC 7120. Furthermore, the nitrate reduction (NarL)/nitrogen fixation (FixJ) family transcription factors response regulator (NfRre1) and photosynthetic electron transport-dependent regulator (NfPedR) were identified as putative positive regulators capable of binding to the promoter region of NfdnaK2 and they may mediate dehydration-induced expression of NfdnaK2 in N. flagelliforme. Our findings provide novel insights into the molecular mechanism of desiccation tolerance in some xerotolerant microorganisms, which could facilitate future synthetic approaches to the creation of extremophiles in microorganisms and plants.