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Background Long-lived trees can accumulate mutations throughout their lifetimes that may influence biotic and abiotic interactions. For example, some Eucalyptus trees display marked variation in herbivore defence within a single canopy. These “mosaic” trees support foliage with distinct chemotypes which are differentially favoured by insect and vertebrate herbivores, resulting in susceptible and resistant branches within a single canopy. These mosaic trees provide a unique opportunity to explore the biosynthesis and genetic regulation of chemical defences in the foliage. The biosynthesis of the principal defence compounds, terpenoid-dominated essential oils, is well understood. However, the regulation of the genes involved and thus the control of phenotypic variation within a single tree canopy remains a mystery. Results We sequenced the transcriptomes of the leaves of the two different chemotypes of a chemically mosaic Eucalyptus melliodora tree using 454 pyrosequencing technology. We used gene set enrichment analysis to identify differentially expressed transcripts and found the proportion of differentially expressed genes in the resistant and susceptible foliage similar to the transcript difference between functionally distinct tissues of the same organism, for example roots and leaves. We also investigated sequence differences in the form of single nucleotide polymorphisms and found 10 nucleotides that were different between the two branches. These are likely true SNPs and several occur in regulatory genes. Conclusion We found three lines of evidence that suggest changes to a ‘master switch’ can result in large scale phenotypic changes: 1. We found differential expression of terpene biosynthetic genes between the two chemotypes that could contribute to chemical variation within this plant. 2. We identified many genes that are differentially expressed between the two chemotypes, including some unique genes in each branch. These genes are involved in a variety of processes within the plant and many could contribute to the regulation of secondary metabolism, thus contributing to the chemical variation. 3. We identified 10 SNPs, some of which occur in regulatory genes that could influence secondary metabolism and thus contribute to chemical variation. Whilst this research is inherently limited by sample size, the patterns we describe could be indicative of other plant genetic mosaics.