Germ band retraction (GBR) stage is one of the important stages during insect development. It is associated with an extensive epithelial morphogenesis and may also be pivotal in generation of morphological diversity in insects. Despite its importance, only a handful of studies report the transcriptome repertoire of this stage in insects. Here, we report generation, annotation and analysis of ESTs from the embryonic stage (16–22 h post fertilization) of laboratory-reared Anopheles stephensi mosquitoes. A total of 1002 contigs were obtained upon clustering of 1140 high-quality ESTs, which demonstrates an astonishingly low transcript redundancy (12.1%). Putative functions were assigned only to 213 contigs (21%), comprising mainly of transcripts encoding protein synthesis machinery. Approximately 78% of the transcripts remain uncharacterized, illustrating a lack of sequence information about the genes expressed in the embryonic stages of mosquitoes. This study highlights several novel transcripts, which apart from insect development, may significantly contribute to the essential biological complexity underlying insect viability in adverse environments. Nonetheless, the generated sequence information from this work provides a comprehensive resource for genome annotation, microarray development, phylogenetic analysis and other molecular biology applications in entomology.