Two species of nitrogen-fixing blue-green algae (cyanobacteria) have been isolated from local freshwater sources and fields. These were Anabaena variabilis and Nostoc sp. Experiments were carried out to propagate these on a large scale under field conditions, suitable for the use of small farmers. Effects of these algae as a substitute/supplement to the commercial nitrogen fertiliser £or the variety CICA 8 have been investigated under two soil types: maverley loam and clay loam. Blue-green algae alone without any added chemical fertiliser increased the rice yields between 15 and 25% over the control without any fertiliser. When used as a supplement along with fertilizer, the blue-greens still increased yields over their respective controls with fertiliser. Protein levels of the grains increased with the use of blue-greens similar to that of fertiliser. However, soluble carbohydrates did not show much differences.