Background: Plants of the Huperziaceae family, which comprise the two genera Huperzia and Phlegmariurus, produce various types of lycopodium alkaloids that are used to treat a number of human ailments, such as contusions, swellings and strains. Huperzine A, which belongs to the lycodine type of lycopodium alkaloids, has been used as an anti-Alzheimer's disease drug candidate. Despite their medical importance, little genomic or transcriptomic data are available for the members of this family. We used massive parallel pyrosequencing on the Roche 454-GS FLX Titanium platform to generate a substantial EST dataset for Huperzia serrata (H. serrata) and Phlegmariurus carinatus (P. carinatus) as representative members of the Huperzia and Phlegmariurus genera, respectively. H. serrata and P. carinatus are important plants for research on the biosynthesis of lycopodium alkaloids. We focused on gene discovery in the areas of bioactive compound biosynthesis and transcriptional regulation as well as genetic marker detection in these species.Results: For H. serrata, 36,763 unique putative transcripts were generated from 140,930 reads totaling over 57,028,559 base pairs; for P. carinatus, 31,812 unique putative transcripts were generated from 79,920 reads totaling over 30,498,684 base pairs. Using BLASTX searches of public databases, 16,274 (44.3%) unique putative transcripts from H. serrata and 14,070 (44.2%) from P. carinatus were assigned to at least one protein. Gene Ontology (GO) and Kyoto Encyclopedia of Genes and Genomes (KEGG) orthology annotations revealed that the functions of the unique putative transcripts from these two species cover a similarly broad set of molecular functions, biological processes and biochemical pathways.In particular, a total of 20 H. serrata candidate cytochrome P450 genes, which are more abundant in leaves than in roots and might be involved in lycopodium alkaloid biosynthesis, were found based on the comparison of H. serrata and P. carinatus 454-ESTs and real-time PCR analysis. Four unique putative CYP450 transcripts (Hs01891, Hs04010, Hs13557 and Hs00093) which are the most likely to be involved in the biosynthesis of lycopodium alkaloids were selected based on a phylogenetic analysis. Approximately 115 H. serrata and 98 P. carinatus unique putative transcripts associated with the biosynthesis of triterpenoids, alkaloids and flavones/flavonoids were located in the 454-EST datasets. Transcripts related to phytohormone biosynthesis and signal transduction as well as transcription factors were also obtained. In addition, we discovered 2,729 and 1,573 potential SSR-motif microsatellite loci in the H. serrata and P. carinatus 454-ESTs, respectively.Conclusions: The 454-EST resource allowed for the first large-scale acquisition of ESTs from H. serrata and P. carinatus, which are representative members of the Huperziaceae family. We discovered many genes likely to be involved in the biosynthesis of bioactive compounds and transcriptional regulation as well as a large number of potential microsatellite markers. These results constitute an essential resource for understanding the molecular basis of developmental regulation and secondary metabolite biosynthesis (especially that of lycopodium alkaloids) in the Huperziaceae, and they provide an overview of the genetic diversity of this family.