C-phycocyanin (C-PC) is a blue pigment in cyanobacteria, rhodophytes and cryptophytes with fluorescent and antioxidative properties. C-PC is presently extracted from open pond cultures of the cyanobacterium Arthrospira platensis although these cultures are not very productive and open for contaminating organisms. C-PC is considered a healthy ingredient in cyanobacterial-based foods and health foods while its colouring, fluorescent or antioxidant properties are utilised only to a minor extent. However, recent research and developments in C-PC synthesis and functionality have expanded the potential applications of C-PC in biotechnology, diagnostics, foods and medicine: The productivity of C-PC has been increased in heterotrophic, high cell density cultures of the rhodophyte Galdieria sulphuraria that are grown under well-controlled and axenic conditions. C-PC purification protocols based on various chromatographic principles or novel two-phase aqueous extraction methods have expanded in numbers and improved in performance. The functionality of C-PC as a fluorescent dye has been improved by chemical stabilisation of C-PC complexes, while protein engineering has also introduced increased stability and novel biospecific binding sites into C-PC fusion proteins. Finally, our understanding of the physiological functions of C-PC in humans has been improved by a mechanistic hypothesis that links the chemical properties of the phycocyanobilin chromophores of C-PC to the natural antioxidant, bilirubin, and may explain the observed health benefits of C-PC intake. This review outlines how C-PC is produced and utilised and discusses the novel C-PC synthesis procedures and applications.