The ability of cyanobacteria to produce complex secondary metabolites with potent biological activities has gathered considerable attention due to their potential therapeutic and agrochemical applications. However, the precise physiological or ecological roles played by a majority of these metabolites have remained elusive. Several studies have shown that cyanobacteria are able to interfere with other organisms in their communities through the release of compounds into the surrounding medium, a phenomenon usually referred to as allelopathy. Exudates from the freshwater cyanobacterium Oscillatoria sp. had previously been shown to inhibit the green microalga Chlorella vulgaris. In this study, we observed that maximal allelopathic activity is highest in early growth stages of the cyanobacterium, and this provided sufficient material for isolation and chemical characterization of active compounds that inhibited the growth of C. vulgaris. Using a bioassay-guided approach, we isolated and structurally characterized these metabolites as cyclic peptides containing several unusually modified amino acids that are found both in the cells and in the spent media of Oscillatoria sp. cultures. Strikingly, only the mixture of the two most abundant metabolites in the cells was active toward C. vulgaris. Synergism was also observed in a lung cancer cell cytotoxicity assay. The binary mixture inhibited other phytoplanktonic organisms, supporting a natural function of this synergistic mixture of metabolites as allelochemicals.