Abstract Medusae of Turritopsis dohrnii undergo reverse development in response to physical damage, adverse environmental conditions, or aging. Senescent, weakened or damaged medusae transform into a cluster of poorly differentiated cells (known as the cyst stage), which metamorphose back into a preceding life cycle stage, the polyp. During the metamorphosis, cell transdifferentiation occurs. The cyst represents the intermediate stage between a reverting medusa and a healthy polyp, during which cell transdifferentiation and tissue reorganization take place. Here we characterize and compare the transcriptomes of the polyp and newborn medusa stages of T. dohrnii with that of the cyst, to identify biological networks potentially involved in the reverse development and transdifferentiation processes. The polyp, medusa and cyst of T. dohrnii were sequenced through Illumina RNA-sequencing and assembled using a de novo approach, resulting in 92,569, 74,639 and 86,373 contigs, respectively. The transcriptomes were annotated and comparative analyses among the stages identified biological networks that were significantly over-and under-expressed in the cyst as compared to the polyp and medusa stages. Biological processes that occur at the cyst stage such as telomerase activity, regulation of transposable elements and DNA repair systems, and suppression of cell signaling pathways, mitotic cell division and cellular differentiation and development may be involved in T. dohrnii’s reverse development and transdifferentiation. Our results are the first attempt to understand T. dohrnii’s life-cycle reversal at the genetic level, and indicate possible avenues of future research on developmental strategies, cell transdifferentiation, and aging using T. dohrnii as a non-traditional in vivo system.