The genus Gossypium is a globally important crop that is used to produce textiles, oil and protein. However, gossypol, which is found in cultivated cottonseed, is toxic to humans and non-ruminant animals. Efforts have been made to breed improved cultivated cotton with lower gossypol content. The delayed gland morphogenesis trait possessed by some Australian wild cotton species may enable the widespread, direct usage of cottonseed. However, the mechanisms about the delayed gland morphogenesis are still unknown. Here, we sequenced the first Australian wild cotton species (Gossypiumaustrale) and a diploid cotton species (Gossypiumarboreum) using the Illumina Hiseq 2000 RNA-seq platform to help elucidate the mechanisms underlying gossypol synthesis and gland development. Paired-end Illumina short reads were de novo assembled into 226,184, 213,257 and 275,434 transcripts, clustering into 61,048, 47,908 and 72,985 individual clusters with N50 lengths of 1,710 bp, 1544 BP and 1,743 bp, respectively. The clustered Unigenes were searched against three public protein databases (TrEMBL, SwissProt and RefSeq) and the nucleotide and protein sequences of Gossypiumraimondii using BLASTx and BLASTn. A total of 21,987, 17,209 and 25,325 Unigenes were annotated. Of these, 18,766 (85.4%), 14,552 (84.6%) and 21,374 (84.4%) Unigenes could be assigned to GO-term classifications. We identified and analyzed 13,884 differentially expressed Unigenes by clustering and functional enrichment. Terpenoid-related biosynthesis pathways showed differentially regulated expression patterns between the two cotton species. Phylogenetic analysis of the terpene synthases family was also carried out to clarify the classifications of TPSs. RNA-seq data from two distinct cotton species provide comprehensive transcriptome annotation resources and global gene expression profiles during seed germination and gland and gossypol formation. These data may be used to further elucidate various mechanisms and help promote the usage of cottonseed.