Very little is known about molecular events associated with callus differentiation in indica rice. The genes expressed differentially during shoot meristem initiation were identified on genomic arrays applied to efficiently regenerating rice calli. A thidiazuron (TDZ; N-phenyl-N-thiadiazol-1,2,3–5,ylurea)-dependent regeneration protocol was developed for efficient embryogenesis in indica rice. The regenerating embryogenic calli induced by TDZ for 10 days showed transcriptional modulation of a number of genes associated with photosynthesis, hormone metabolism, plant development, signal transduction, light response, and plant defense. Eighteen candidate miRNAs were predicted to target the genes expressed differentially in the embryogenic calli grown in TDZ-containing medium. The majority of the photosynthesis-related genes up-regulated in differentiating calli were not expressed or were down-regulated in developing seeds and inflorescences. Most of the genes down-regulated in differentiating calli were up-regulated in developing seeds. The transcriptome of differentiating callus most closely resembled that of the germinating whole seed.