The green alga Ostreobium is an important coral holobiont member, playing key roles in skeletal decalcification and providing photosynthate to bleached corals that have lost their dinoflagellate endosymbionts. Ostreobium lives in the coral’s skeleton, a low-light environment with variable pH and O2 availability. We present the Ostreobium nuclear genome and a metatranscriptomic analysis of healthy and bleached corals to improve our understanding of Ostreobium’s adaptations to its extreme environment and its roles as a coral holobiont member. The Ostreobium genome has 10,663 predicted protein-coding genes and shows adaptations for life in low and variable light conditions and other stressors in the endolithic environment. This alga presents a rich repertoire of light-harvesting complex proteins but lacks many genes for photoprotection and photoreceptors. It also has a large arsenal of genes for oxidative stress response. An expansion of extracellular peptidases suggests that Ostreobium may supplement its energy needs by feeding on the organic skeletal matrix, and a diverse set of fermentation pathways allows it to live in the anoxic skeleton at night. Ostreobium depends on other holobiont members for vitamin B12, and our metatranscriptomes identify potential bacterial sources. Metatranscriptomes showed Ostreobium becoming a dominant agent of photosynthesis in bleached corals and provided evidence for variable responses among coral samples and different Ostreobium genotypes. Our work provides a comprehensive understanding of the adaptations of Ostreobium to its extreme environment and an important genomic resource to improve our comprehension of coral holobiont resilience, bleaching, and recovery.