The Asian rice gall midge [Orseolia oryzae (Wood-Mason)] is an important rice pest causing an annual average yield loss of about US $80 million in India. Rice varieties possess several discrete resistance (R) genes conferring resistance against the pest in two distinct ways, i.e., with (HR+ type) or without (HR- type) the expression of hypersensitive reaction (HR). The aim of the present work is to understand the molecular basis of compatible and incompatible (HR- type) rice gall midge interactions between the rice variety Kavya and the two gall midge biotypes: the virulent GMB4M and the avirulent GMB1 using transcriptional microarray gene expression analysis. A large number of differentially expressed genes (602genes in incompatible interaction and 1,330 genes in compatible interaction with at least twofold changes, p value <0.05) was obtained from the microarray analysis that could be grouped into six clusters based on their induction during both or either of the interactions. MapMan software was used for functional characterization of these genes into 13 categories (BINs). Real-time polymerase chain reaction validation of 26 genes selected through the analysis revealed four genes viz. NADPH oxidase, AtrbohF, cinnamoyl-CoA reductase, and von Willebrand factor type A domain containing protein coding genes to be significantly upregulated during the incompatible interaction. But most of the signature genes related to HR+ type resistance like salicylic acid pathway-related genes and disease resistance protein coding genes were downregulated. On the other hand, during the compatible interaction, genes related to primary metabolism and nutrient transport were upregulated and genes for defense and signaling were downregulated. We propose a hypothesis that HR- type of resistance in the rice variety Kavya against gall midge could be due to the constitutive expression of an R gene and a case of extreme resistance which is devoid of cell death. Compatible interaction, however, modulated a large number of differentially expressed transcripts to reprogram cell organization, cell remodeling, and relocation of nutrients through transport to support insect growth.