The Asian rice gall midge, Orseolia oryzae (Diptera: Cecidomyiidae), is the third most destructive insect pest of rice (Oryza sativa L.). Till date, 11 gall midge resistance gene loci have been characterized in different rice varieties. To elucidate molecular basis of incompatible (hypersensitive response plus [HR+] type) and compatible rice-gall midge interactions, two suppressive subtraction hybridization cDNA libraries were constructed. These were enriched for differentially expressed transcripts after gall midge infestation in two rice varieties (resistant Suraksha and susceptible TN1). In total, 2784 ESTs were generated and sequenced from the two libraries, of which 1536 were from the resistant Suraksha and 1248 were from the susceptible TN1. Majority (80%) of the ESTs was non-redundant sequences with known functions and was classified into three principal gene ontology (GO) categories and 12 groups. Upregulation of NBS-LRR, Cytochrome P450, heat shock proteins, phenylalanine ammonia lyase and OsPR10α genes from the Suraksha library, as revealed by real-time PCR, indicated that R gene mediated, salicylic acid related defense pathway is likely to be involved in gall midge resistance. Present study suggested that resistance in Suraksha against gall midge is similar in nature to the resistance observed in plants against pathogens. However, in TN1, genes related to primary metabolism and redox were induced abundantly. Results suggested that genes encoding translationally controlled tumor protein and NAC domain proteins are likely to be involved in the gall midge susceptibility.