AbstractLungfish and coelacanths are the only living sarcopterygian fish. The phylogenetic relationship of lungfish to the last common ancestor of tetrapods and their close morphological similarity to their fossil ancestors make this species uniquely interesting. However their genome size, the largest among vertebrates, is hampering the generation of a whole genome sequence. To provide a partial solution to the problem, a high-coverage lungfish reference transcriptome was generated and assembled. The present findings indicate that lungfish, not coelacanths, are the closest relatives to land-adapted vertebrates. Whereas protein-coding genes evolve at a very slow rate, possibly reflecting a “living fossil” status, transposable elements appear to be active and show high diversity, suggesting a role for them in the remarkable expansion of the lungfish genome. Analyses of single genes and gene families documented changes connected to the water to land transition and demonstrated the value of the lungfish reference transcriptome for comparative studies of vertebrate evolution.