Pufferfish such as fugu and tetraodon carry the smallest genomes among all vertebrates and are ideal for studying genome evolution. However, comparative genomics using these species is hindered by the poor annotation of their genomes. We performed RNA sequencing during key stages of maternal to zygotic transition of Tetraodon nigroviridis and report its first developmental transcriptome. We assembled 61,033 transcripts (23,837 loci) representing 80% of the annotated gene models and 3816 novel coding transcripts from 2667 loci. We demonstrate the similarities of gene expression profiles between pufferfish and zebrafish during maternal to zygotic transition and annotated 1120 long non-coding RNAs (lncRNAs) many of which differentially expressed during development. The promoters for 60% of the assembled transcripts result validated by CAGE-seq. Despite the extreme compaction of the tetraodon genome and the dramatic loss of transposons, the length of lncRNA exons remain comparable to that of other vertebrates and a small set of lncRNAs appears enriched for transposable elements suggesting a selective pressure acting on lncRNAs length and composition. Finally, a set of lncRNAs are microsyntenic between teleost and vertebrates, which indicates potential regulatory interactions between lncRNAs and their flanking coding genes. Our work provides a fundamental molecular resource for vertebrate comparative genomics and embryogenesis studies.