Alfalfa (Medicago sativa), an important forage crop that is also a potential biofuel crop, has advantages of high yield, high lignocellulose concentration in stems, and low input costs. Marker assisted selection (MAS) and/or genomic selection (GS) could enhance alfalfa improvement, but large numbers of markers are needed to map important agronomic traits and predict genomic breeding values. The main objective of this study was to discover single nucleotide polymorphism (SNP) for alfalfa using Illumina transcriptome sequencing and to develop SNP assays in candidate genes for biomass yield and composition. We have sequenced 27 alfalfa transcriptomes, including elite genotypes from four major alfalfa breeding companies in the US.  A pilot sequencing of three genotypes resulted in a total of 80.7 million reads, assembling of which generated 155,484 contigs with a total length of 51.3 Mbp and an average length of 330 bp, giving an average read depth of 36-fold for each genotype. The realignment of reads to the contigs enabled the detection of 260,848 putative SNPs (one SNP per 197 bp) and 11,090 InDels among the three genotypes. Over 95% of the SNPs have coverage of 5 or more reads for each of the three genotypes. Of all contigs, 55.6% were aligned to M. truncatula coding sequence, build 3.0, which carry about 190,000 SNPs. The distribution of these SNPs along eight chromosomes is roughly even. We are developing marker assays for selected SNPs in order to map important agronomic traits and assess linkage disequilibrium (LD) and population structure in breeding populations.