In order to understand the metabolic pathway of arachidonic acid and other lipids in Myrmecia incisa, the transcriptome pyrosequencing of this microalga was conducted by use of the sequencer Roche 454 GS FLX. Totally 393 722 reads (minimal size>29 bp) averaging 333 bp were generated from one consecutive pyrosequencing run. Cleaning of the raw sequences resulted in a total of 382 468 high quality reads with an average length of 322 nucleotides totalling 123 Mb. After clustering and assembly, these reads were assembled into 22 714 contigs and 25 621 singletons. The average length for contigs and singletons were 639 bp and 277 bp, respectively. By annotating the unisequences, the metabolic pathways of lipids were constructed. Fatty acid was de novo synthesized in chloroplasts, and free fatty acids were transported into cytosol where triacylglycerol was synthesized by endoplasmic reticulum. Oil bodies were formed possibly with the help of caleosins. Arachidonic acid was synthesized by desaturation for several times and elongation from oleic acid. Oleic acid was formed by stearoyl ACP desaturase, whereas palmitoic acid bound with glucolipid was generated by Δ7 desaturase. This research lays a foundation for systematic investigation into the manipulation of lipid metabolism and gene modification for higher production of ArA in M. incisa.