The unicellular red alga, Cyanidium caldarium, synthesizes phycocyanobilin from protoheme via biliverdin IX alpha. In vitro transformation of protoheme to biliverdin IX alpha and biliverdin IX alpha to phycobilins were previously shown to require NADPH, ferredoxin, and ferredoxin-NADP+ reductase, as well as specific heme oxygenase and phycobilin formation enzymes. The role of NADPH in these reactions was investigated in this study. The C. caldarium enzymatic activities that catalyze biliverdin IX alpha formation from protoheme, and phycobilin formation from biliverdin IX alpha, were partially purified by differential (NH4)2SO4 precipitation. The enzyme fractions, when supplemented with a light-driven ferredoxin-reducing photosystem I fraction derived from spinach leaves, catalyzed light-dependent transformation of protoheme to biliverdin IX alpha and biliverdin IX alpha to phycobilins, with or without the addition of NADPH and ferredoxin-NADP+ reductase. In the dark, neither reaction occurred unless NADPH and ferredoxin-NADP+ reductase were supplied. These results indicate that the only role of NADPH in both reactions of phycobilin biosynthesis, in vitro, is to reduce ferredoxin via ferredoxin-NADP+ reductase and that reduced ferredoxin can directly supply the electrons needed to drive both steps in the transformation of protoheme to phycocyanobilin.