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Summary Microcystisis a cyanobacterium that forms toxic blooms in freshwater ecosystems around the world. Biological variation among taxa within the genus is apparent through genetic and phenotypic differences between strains and via the spatial and temporal distribution of strains in the environment, and this fine‐scale diversity exerts strong influence over bloom toxicity. Yet we do not know how varying traits ofMicrocystisstrains govern their environmental distribution, the tradeoffs and links between these traits, or how they are encoded at the genomic level. Here we synthesize current knowledge on the importance of diversity withinMicrocystisand on the genes and traits that likely underpin ecological differentiation of taxa. We briefly review spatial and environmental patterns ofMicrocystisdiversity in the field and genetic evidence for cohesive groups withinMicrocystis. We then compile data on strain‐level diversity regarding growth responses to environmental conditions and explore evidence for variation of community interactions acrossMicrocystisstrains. Potential links and tradeoffs between traits are identified and discussed. The resulting picture, while incomplete, highlights key knowledge gaps that need to be filled to enable new models for predicting strain‐level dynamics, which influence the development, toxicity and cosmopolitan nature ofMicrocystisblooms.