In this study, we describe a series of experiments presenting the biochemical evidence for the cleavage of an intact phycoerythrin (α and β subunits) to phycoerythrin with only fragmented α-subunit, which is also functional, in Phormidium sp. A27DM. Culture, whether grown in different conditions (static or sparging) or in medium with different pH, produced truncated phycoerythrin. This indicated that the growth conditions or pH of medium did not lead to cleavage of phycoerythrin. Culture when grown in the medium lacking NaNO3 started producing truncated phycoerythrin after 9 days of growth only, thus proving that nitrogen depletion was playing a role in phycoerythrin cleavage. In vivo and in vitro experiments with different proteases also resulted in production of truncated phycoerythrin. And on the addition of different protease inhibitors intact phycoerythrin formation was taking place even after 60 days of growth, thus indicating the possible role of proteases in phycoerythrin cleavage. Moreover, purified intact PE when stored at 4 °C also gets cleaved to 14 kDa fragment. However, when glacial acetic acid was added to phycoerythrin no cleavage was observed even after 4 months of storage. The events indicate that production of truncated PE is meant for continuing the absorption of light under stress conditions.