The mutant strain of the diazotrophic cyanobacterium Anabaena doliolum able to tolerate high temperature was isolated by induced mutation techniques using ethyl methane sulphonate. This mutant strain exhibited higher temperature tolerance than the wild type. The wild type was able tolerate temperature up to 40 °C whereas the mutant was able to grow at an elevated temperature of 48 °C. This mutant exhibited higher growth rate, heterocyst frequency, and nitrogen fixation. Mutant strains exhibited comparable levels of chlorophyll, phycocyanin, PS II activity, and O2 evolution as compared to unexposed control. Results also showed that the mutant accumulated low levels of peroxides and lipid peroxidation products with enhanced activity of antioxidant enzymes. The FAME analysis revealed quantitative and qualitative changes in the profile of fatty acids in the mutant strain. Maximum number of saturated fatty acids was observed in the mutant strain followed by control whereas the wild type exposed to elevated temperature showed least diversity of fatty acids. Enhanced level of antioxidant enzymes coupled with efficient modulation of fatty acid profile could therefore enhance the mutant to resist the high temperature stress. The results could be exploited further to decipher molecular mechanisms underlying the temperature tolerance and enhancing the utility of A. doliolum as efficient biofertilizer for rice paddy keeping in view of the future climatic change scenario.