Summary Danshen, Salvia miltiorrhiza Bunge, is one of the most widely used herbs in traditional Chinese medicine, wherein its rhizome/roots are particularly valued. The corresponding bioactive components include the tanshinone diterpenoids, the biosynthesis of which is a subject of considerable interest. Previous investigations of the S. miltiorrhiza transcriptome have relied on short‐read next‐generation sequencing (NGS) technology, and the vast majority of the resulting isotigs do not represent full‐length cDNA sequences. Moreover, these efforts have been targeted at either whole plants or hairy root cultures. Here, we demonstrate that the tanshinone pigments are produced and accumulate in the root periderm, and apply a combination of NGS and single‐molecule real‐time (SMRT) sequencing to various root tissues, particularly including the periderm, to provide a more complete view of the S. miltiorrhiza transcriptome, with further insight into tanshinone biosynthesis as well. In addition, the use of SMRT long‐read sequencing offered the ability to examine alternative splicing, which was found to occur in approximately 40% of the detected gene loci, including several involved in isoprenoid/terpenoid metabolism. Significance Statement Here, we combined NGS and SMRT sequencing to generate a more complete/full‐length S. miltiorrhiza transcriptome. Our study provides a general model for studying the full‐length transcriptome, alternative splicing, and the biosynthesis of active constituents in medicinal plants, as well as important information about the important Danshen constituent of traditional Chinese medicine more specifically.