Background: Photorhabdus and Xenorhabdus are Gram-negative, phylogenetically related, enterobacteria, forming mutualism with the entomopathogenic nematodes Heterorhabditis and Steinernema, respectively. The mutualistic bacteria living in the intestines of the nematode infective juveniles are pathogenic to the insect upon release by the nematodes into the insect hemolymph. Such a switch needs activation of genes that promote bacterial virulence. We studied in vivo gene expression in Photorhabdus temperata and Xenorhabdus koppenhoeferi upon infection of the white grub Rhizotrogus majalis using selective capture of transcribed sequences technique. Results: A total of 40 genes in P. temperata and 39 in X. koppenhoeferi were found to be upregulated in R. majalis hemolymph at 24 h post infection. Genomic presence or upregulation of these genes specific in either one of the bacterium was confirmed by the assay of comparative hybridization, and the changes of randomly selected genes were further validated by quantitative real-time PCR. The identified genes could be broadly divided into seven functional groups including cell surface structure, regulation, virulence and secretion, stress response, intracellular metabolism, nutrient scavenging, and unknown. The two bacteria shared more genes in stress response category than any other functional group. More than 60% of the identified genes were uniquely induced in either bacterium suggesting vastly different molecular mechanisms of pathogenicity to the same insect host. In P. temperata lysR gene encoding transcriptional activator was induced, while genes yijC and rseA encoding transcriptional repressors were induced in X. koppenhoeferi. Lipopolysaccharide synthesis gene lpsE was induced in X. koppenhoeferi but not in P. temperata. Except tcaC and hemolysin related genes, other virulence genes were different between the two bacteria. Genes involved in TCA cycle were induced in P. temperata whereas those involved in glyoxylate pathway were induced in X. koppenhoeferi, suggesting differences in metabolism between the two bacteria in the same insect host. Upregulation of genes encoding different types of nutrient uptake systems further emphasized the differences in nutritional requirements of the two bacteria in the same insect host. Photorhabdus temperata displayed upregulation of genes encoding siderophore-dependent iron uptake system, but X. koppenhoeferi upregulated genes encoding siderophore-independent ion uptake system. Photorhabdus temperata induced genes for amino acid acquisition but X. koppenhoeferi upregulated malF gene, encoding a maltose uptake system. Further analyses identified possible mechanistic associations between the identified gene products in metabolic pathways, providing an interactive model of pathogenesis for each bacterium species. Conclusion: This study identifies set of genes induced in P. temperata and X. koppenhoeferi upon infection of R. majalis, and highlights differences in molecular features used by these two closely related bacteria to promote their pathogenicity in the same insect host.