Diverse bacteria lead a life as pathogens or predators of other bacteria in many environments. However, their impact on emerging ecological processes in natural settings remains to be assessed. Here we describe a novel type of obligate, intracellular predatory bacterium of widespread distribution that preys on soil cyanobacteria in biocrusts. The predator, Candidatus Cyanoraptor togatus, causes localized, cm-sized epidemics that are visible to the naked eye, obliterates cyanobacterial net primary productivity, and severely impacts crucial biocrust properties like nitrogen cycling, dust trapping and moisture retention. The combined effects of high localized morbidity and areal incidence result in decreases approaching 10% of biocrust productivity at the ecosystem scale. Our findings show that bacterial predation can be an important loss factor shaping not only the structure but also the function of microbial communities.