Streptophyte green algae, ancestors of Embryophytes, occur frequently in terrestrial habitats being exposed to high light intensities, water scarcity and potentially toxic metal cations under acidic conditions. The filamentous Zygogonium ericetorum synthesizes a purple vacuolar ferrous pigment, which is lost after aplanospore formation. However, it is unknown whether this cellular reorganization also removes excessive iron from the protoplast and how Z. ericetorum copes with high concentrations of aluminium. Here we show that aplanospore formation shifts iron into the extracellular space of the algal filament. Upon germination of aplanospores, aluminium is bound in the parental cell wall. Both processes reduce iron and aluminium in unpigmented filaments. Comparison of the photosynthetic oxygen production in response to light and temperature gradients in two different Z. ericetorum strains from an Austrian alpine and a Scottish highland habitat revealed lower values in the latter strain. In contrast, the Scottish strain showed a higher optimum quantum yield of PSII during desiccation stress followed by rehydration. Furthermore, pigmented filaments of both strains exhibited a higher light and temperature dependent oxygen production when compared to the unpigmented phenotype. Our results demonstrate a high metal tolerance of Z. ericetorum, which is crucial for surviving in acidic terrestrial habitats.