Sugarcane is an important tropical crop mainly cultivated to produce ethanol and sugar. Crop productivity is negatively affected by Acidovorax avenae subsp avenae (Aaa), which causes the red stripe disease. Little is known about the molecular mechanisms triggered in response to the infection. We have investigated the molecular mechanism activated in sugarcane using a RNA-seq approach. We have produced a de novo transcriptome assembly (TR7) from sugarcane RNA-seq libraries submitted to drought and infection with Aaa. Together, these libraries present 247 million of raw reads and resulted in 168,767 reference transcripts. Mapping in TR7 of reads obtained from infected libraries, revealed 798 differentially expressed transcripts, of which 723 were annotated, corresponding to 467 genes. GO and KEGG enrichment analysis showed that several metabolic pathways, such as code for proteins response to stress, metabolism of carbohydrates, processes of transcription and translation of proteins, amino acid metabolism and biosynthesis of secondary metabolites were significantly regulated in sugarcane. Differential analysis revealed that genes in the biosynthetic pathways of ET and JA PRRs, oxidative burst genes, NBS-LRR genes, cell wall fortification genes, SAR induced genes and pathogenesis-related genes (PR) were upregulated. In addition, 20 genes were validated by RT-qPCR. Together, these data contribute to a better understanding of the molecular mechanisms triggered by the Aaa in sugarcane and opens the opportunity for the development of molecular markers associated with disease tolerance in breeding programs.