Abstract Background Gonad development and differentiation is an essential function for all sexually reproducing species, and many aspects of these developmental processes are highly conserved among the metazoa. However, the mechanisms underlying gonad development and gametogenesis remain unclear in Tridacna squamosa, a large-size bivalve of great ecological value. They are protandrous simultaneous hermaphrodites, with the male gonad maturing first, eventually followed by the female gonads. In this study, nine gonad libraries representing resting, male and hermaphrodite stages in T. squamosa were performed to identify the molecular mechanisms. Results Sixteen thousand four hundred ninety-one unigenes were annotated in the NCBI non-redundant protein database. Among the annotated unigenes, 5091 and 7328 unigenes were assigned to Gene Ontology categories and the Kyoto Encyclopedia of Genes and Genomes (KEGG) Pathway database, respectively. A total of 4763 differentially expressed genes (DEGs) were identified by comparing male to resting gonads, consisting of 3499 which were comparatively upregulated in males and 1264 which were downregulated in males. Six hundred-ninteen DEGs between male and hermaphroditic gonads were identified, with 518 DEGs more strongly expressed in hermaphrodites and 101 more strongly expressed in males. GO (Gene Ontology) and KEGG pathway analyses revealed that various biological functions and processes, including functions related to the endocrine system, oocyte meiosis, carbon metabolism, and the cell cycle, were involved in regulating gonadal development and gametogenesis in T. squamosa. Testis-specific serine/threonine kinases 1 (TSSK1), TSSK4, TSSK5, Doublesex- and mab-3-related transcription factor 1 (DMRT1), SOX, Sperm surface protein 17 (SP17) and other genes were involved in male gonadal development in Tridacna squamosal. Both spermatogenesis- (TSSK4, spermatogenesis-associated protein 17, spermatogenesis-associated protein 8, sperm motility kinase X, SP17) and oogenesis-related genes (zona pellucida protein, Forkhead Box L2, Vitellogenin, Vitellogenin receptor, 5-hydroxytryptamine, 5-hydroxytryptamine receptor) were simultaneously highly expressed in the hermaphroditic gonad to maintain the hermaphroditism of T. squamosa. Conclusion All these results from our study will facilitate better understanding of the molecular mechanisms underlying giant clam gonad development and gametogenesis, which can provided a base on obtaining excellent gametes during the seed production process for giant clams.