Azadirachta indica (neem) is the only source of azadirachtin, which is known for its insecticide activity. Melia azedarach is a related species of A. indica, widely distributed in the south of China. In this study, the leaf transcriptomes of these two Meliaceae plants were sequenced. More than 40 million clean reads were generated from each library. About 80 % of A. indica reads were mapped to the neem genome, while 93 % of M. azedarach reads were mapped to its assembled transcripts and unigenes dateset. After mapping and assembly, 225,972 transcripts and 91,607 unigenes of M. azedarach were obtained and 1179 new genes of A. indica were detected. Comparative analysis of the annotated differentially expressed genes (DEG) showed that all six DEGs involved in terpenoid backbone biosynthesis were up-regulated in A. indica. Chemical analysis of the two plants revealed A. indica leaves contained 2.45 % total terpenoid and nearly 20–50 µg azadirachtin per gram, whereas azadirachtin was not detected in M. azedarach and total terpenoid content was reached 1.67 %. These results give us a better insight into the transcriptomes differences between A. indica and M. azedarach, and help us to understand the terpenoid biosynthesis pathway in vivo.Electronic supplementary materialThe online version of this article (doi:10.1186/s40064-016-2460-6) contains supplementary material, which is available to authorized users.