Both transcription and post-transcriptional processes, such as alternative splicing, play crucial roles in controlling developmental programs in metazoans. Recently emerged RNA-seq method has brought our understanding of eukaryotic transcriptomes to a new level, because it can resolve both gene expression level and alternative splicing events simultaneously. To gain a better understanding of cellular differentiation in gonads, we analyzed mRNA profiles from Drosophila testes and ovaries using RNA-seq. We identified a set of genes that have sex-specific isoforms in wild-type (WT) gonads, including several transcription factors. We found that differentiation of sperms from undifferentiated germ cells induced a dramatic downregulation of RNA splicing factors. Our data confirmed that RNA splicing events are significantly more frequent in the undifferentiated cell-enriched bag of marbles (bam) mutant testis, but downregulated upon differentiation in WT testis. Consistent with this, we showed that genes required for meiosis and terminal differentiation in WT testis were mainly regulated at the transcriptional level, but not by alternative splicing. Unexpectedly, we observed an increase in expression of all families of chromatin remodeling factors and histone modifying enzymes in the undifferentiated cell-enriched bam testis. More interestingly, chromatin regulators and histone modifying enzymes with opposite enzymatic activities are coenriched in undifferentiated cells in testis, suggesting that these cells may possess dynamic chromatin architecture. Finally, our data revealed many new features of the Drosophila gonadal transcriptomes, and will lead to a more comprehensive understanding of how differential gene expression and splicing regulate gametogenesis in Drosophila. Our data provided a foundation for the systematic study of gene expression and alternative splicing in many interesting areas of germ cell biology in Drosophila, such as the molecular basis for sexual dimorphism and the regulation of the proliferation vs terminal differentiation programs in germline stem cell lineages. The GEO accession number for the raw and analyzed RNA-seq data is GSE16960.