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Background: The disease caused by Haemonchus contortus, a blood-feeding nematode of small ruminants, is of major economic importance worldwide. The infective third-stage larva (L3) of this gastric nematode is enclosed in a cuticle (sheath) and, once ingested with herbage by the host, undergoes an exsheathment process that marks the transition from the free-living (L3) to the parasitic (xL3) stage. This study explored changes in gene transcription associated with this transition and predicted, based on comparative analysis, functional roles for key transcripts in the metabolic pathways linked to larval development., Results: Totals of 101,305 (L3) and 105,553 (xL3) expressed sequence tags (ESTs) were determined using 454 sequencing technology, and then assembled and annotated; the most abundant transcripts encoded transthyretin-like, calcium-binding EF-hand, NAD(P)-binding and nucleotide-binding proteins as well as homologues of Ancylostoma-secreted proteins (ASPs). Using an in silico-subtractive analysis, 560 and 685 sequences were shown to be uniquely represented in the L3 and xL3 stages, respectively; the transcripts encoded ribosomal proteins, collagens and elongation factors (in L3), and mainly peptidases and other enzymes of amino acid catabolism (in xL3). Caenorhabditis elegans orthologues of transcripts that were uniquely transcribed in each L3 and xL3 were predicted to interact with a total of 535 other genes, all of which were involved in embryonic development., Conclusion: The present study indicated that some key transcriptional alterations taking place during the transition from the L3 to the xL3 stage of H. contortus involve genes predicted to be linked to the development of neuronal tissue (L3 and xL3), formation of the cuticle (L3) and digestion of host haemoglobin (xL3). Future efforts using next-generation sequencing and bioinformatic technologies should provide the efficiency and depth of coverage required for the determination of the complete transcriptomes of different developmental stages and/or tissues of H. contortus as well as the genome of this important parasitic nematode. Such advances should lead to a significantly improved understanding of the molecular biology of H. contortus and, from an applied perspective, to novel methods of intervention.