BACKGROUND: Dinoflagellates are one of the most important classes of marine and freshwater algae, notable both for their functional diversity and ecological significance. They occur naturally as free-living cells, as endosymbionts of marine invertebrates and are well known for their involvement in "red tides". Dinoflagellates are also notable for their unusual genome content and structure, which suggests that the organization and regulation of dinoflagellate genes may be very different from that of most eukaryotes. To investigate the content and regulation of the dinoflagellate genome, we performed a global analysis of the transcriptome of the toxic dinoflagellate Alexandrium fundyense under nitrate- and phosphate-limited conditions using Massively Parallel Signature Sequencing (MPSS). RESULTS: Data from the two MPSS libraries showed that the number of unique signatures found in A. fundyense cells is similar to that of humans and Arabidopsis thaliana, two eukaryotes that have been extensively analyzed using this method. The general distribution, abundance and expression patterns of the A. fundyense signatures were also quite similar to other eukaryotes, and at least 10% of the A. fundyense signatures were differentially expressed between the two conditions. RACE amplification and sequencing of a subset of signatures showed that multiple signatures arose from sequence variants of a single gene. Single signatures also mapped to different sequence variants of the same gene. CONCLUSION: The MPSS data presented here provide a quantitative view of the transcriptome and its regulation in these unusual single-celled eukaryotes. The observed signature abundance and distribution in Alexandrium is similar to that of other eukaryotes that have been analyzed using MPSS. Results of signature mapping via RACE indicate that many signatures result from sequence variants of individual genes. These data add to the growing body of evidence for widespread gene duplication in dinoflagellates, which would contribute to the transcriptional complexity of these organisms. The MPSS data also demonstrate that a significant number of dinoflagellate mRNAs are transcriptionally regulated, indicating that dinoflagellates commonly employ transcriptional gene regulation along with the post-transcriptional regulation that has been well documented in these organisms.