The yellow stem borer (YSB), , is a prominent pest in rice cultivation causing serious yield losses. The larval stage is an important stage in YSB, responsible for maximum infestation. However, limited knowledge exists on the biology and mechanisms underlying the growth and differentiation of YSB. To understand and identify the genes involved in YSB development and infestation, so as to design pest control strategies, we performed transcriptome analysis at the first, third, fifth, and seventh larval developmental stages employing Illumina Hi-seq. High-quality reads (HQR) of ∼229 Mb were assembled into 24,775 transcripts with an average size of 1485 bp. Genes associated with various metabolic processes, , detoxification mechanism CYP450, GSTs, and carboxylesterases (CarEs), RNA interference (RNAi) machinery ( , , , , , , , and -related gene), chemoreception (CSPs, GRs, OBPs, and ORs), and regulators transcription factors (TFs) and hormones were differentially regulated during the developmental stages. Identification of stage-specific transcripts made it possible to determine the essential processes of larval development. Comparative transcriptome analysis revealed that YSB has not evolved much with respect to the detoxification mechanism, but showed the presence of distinct RNAi machinery. The presence of strong specific visual recognition coupled with chemosensory mechanisms supports the monophagous nature of YSB. Designed expressed sequenced tags-simple-sequence repeats (EST-SSRs) will facilitate accurate estimation of the genetic diversity of YSB. This is the first report on characterization of the YSB transcriptome and the identification of genes involved in key processes, which will help researchers and industry to devise novel pest control strategies. This study also opens up a new avenue to develop next-generation resistant rice using RNAi or genome editing approaches.