Parasitism is ubiquitous in nature, yet little is known about the evolutionary mechanisms that lead to a parasitic lifestyle. Facultative parasites can switch between free-living and parasitic lifestyles, which may provide an opportunity to study the genetic mechanisms underlying a transition to parasitism. The oligochaete Dero (Allodero) hylae is a facultative parasite commonly found within the ureter of various anuran species, such as the Cuban Tree Frog (Osteopilus septentrionalis). Dero hylae makes passage through the frog’s cloaca, where it then infects the ureter. In the ureter, the worm loses free-living characteristics such as hair setae, dorsal setae, a digestive tract, and fossa with gills as it transitions to a parasitic lifestyle. Dero hylae may be expelled from its host during urination, when this occurs the worm will reacquire free-living characteristics. The focus of this study is to compare the differential gene expression profiles observed when this rapid morphological change takes place. Specimens of D. hylae were collected from wild Cuban Tree Frogs and either flash-frozen for their parasitic stage RNA profile or cultured for two weeks to produce their free-living stage and then flash-frozen. Using the sequenced RNA, a de novo transcriptome was assembled and differential gene expression RNA Tag-Seq analysis between the free-living and parasitic life forms was analyzed. Based on these results, we have identified 213 genes differentially expressed transcripts between the two life forms, 190 of these being up-regulated in the free-living life form. While over half of the differential genes recovered did not recover any significant BLAST hits, many of these genes did provide insight into which molecular signals are potentially used by D. hylae to lose and subsequently regrow their setae, digestive tract, and gills. This analysis provides significant insight into which differentially expressed genes are linked to drastic morphological changes observed in this rare oligochaete parasitism across the free-living and parasitic forms of D. hylae.