Poriferans, like the demosponge Amphimedon queenslandica, are the earliest diverging metazoans and may hold the key to understanding the evolution of metazoan pathways. A. queenslandica exhibits a biphasic lifecycle, with free-swimming larvae and sessile adult stages. To study changes in the transcriptome during this period of morphological and ecological transition, we generated poly(A) fragment libraries for A. queenslandica at four developmental stages: precompetent and competent larvae, postlarvae, and adult. These libraries were sequenced using Applied Biosystems SOLiD technology. This study provides the most comprehensive analysis to date of gene expression in the sponge. It has elucidated the genes that define the two main phases of the sponge lifestyle and identified genes that are important for competence and metamorphosis. More importantly, this study has provided insights into the expression of the genes that characterize metazoan features, such as cell adhesion and differentiation, in an early metazoan. Overall design: 4 stages sequenced: precompetent larvae, competent larvae, postlarvae, adult