The ubiquity of heavy metals in the biosphere results in the introduction of high amounts of toxic metals into the food chain from various sources. In the present study, one of the strongest nitrogen fixing cyanobacterium of the rice fields, Aulosira fertilissima, was subjected to nickel and chromium stress and the ameliorating effect of immobilization was investigated. Cell immobilization could protect the organism’s growth against the toxicity of both heavy metals at LC50 as compared to lethal concentrations. The nitrate reductase activity in free cells treated with the metals was substantially inhibited but immobilized cells treated with 0.1 ppm nickel was not affected by the metal treatment. Cell immobilization also resulted in a significant protection against sub-lethal concentration of chromium but to a lesser degree than it did with sub- lethal levels of nickel. Control immobilized cells also had higher Nitrogenase activity than control free cells. Nickel and chromium addition markedly decreased the enzyme activity in free cells but immobilized cells exposed to sublethal concentrations of both metals could overcome this decrease. Glutamine synthetase showed similar response under immobilized conditions compared to free cells with both metals. The addition of algal filtrate in 3:1 ratio further increased the nitrogenase activity compared with immobilized cells treated with sublethal doses of both metals. Immobilization facilitated higher uptake of nickel as compared to chromium. The observations of the present study clearly demonstrate the protective effect of immobilization on Aulosira fertilissima against Nickel and chromium toxicity. Rice field ecosystem thus possess a bidirectional natural metal ameliorating system where Aulosira mats act as a naturally immobilized system and the decay of Aulosira along with other cyanobacteria act as natural chelators protecting the rice plants from deleterious effects of the heavy metals. Most importantly is that the immobilization process protects the cyanobacterial nitrogen fixing process allowing it to maintain nitrogen economy of the fields in spite of the presence of heavy metals.