Iron is an essential micronutrient for most living organisms, including cyanobacteria. These microorganisms have been found in Earths driest polar and non-polar deserts, including the Atacama Desert, Chile. Iron-containing minerals were identified in colonized rock substrates from the Atacama Desert, however, the interactions between microorganisms and iron minerals remain unclear. In the current study, we determined that colonized gypsum rocks collected from the Atacama Desert contained both magnetite and hematite phases. A cyanobacteria isolate was cultured on substrates consisting of gypsum with embedded magnetite nanoparticles. Transmission electron microscopy imaging revealed a significant reduction in the size of magnetite nanoparticles due to their dissolution, which occurred around the microbial biofilms. Concurrently, hematite was detected, likely from the oxidation of the magnetite nanoparticles. Higher cell counts and production of siderophores were observed in cultures with magnetite nanoparticles suggesting that cyanobacteria were actively acquiring iron from the magnetite nanoparticles. Magnetite dissolution and iron acquisition by the cyanobacteria was further confirmed using large bulk magnetite crystals, uncovering a survival strategy of cyanobacteria in these extreme environments.