The Caenorhabditis elegans somatic gonad was the first organ to have its cell lineage determined, and the gonadal lineages of the two sexes differ greatly in their pattern of cell divisions, cell migration and cell types. Despite much study, the genetic pathways that direct early gonadal development and establish its sexual dimorphism remain largely unknown, with just a handful of regulatory genes identified from genetic screens. To help define the genetic networks that regulate gonadal development, we employed cell-specific RNA-seq. We identified transcripts present in Z1/Z4 or Z1/Z4 daughter cells in each sex at the onset of somatic gonadal sexual differentiation. For comparison, transcripts were identified in whole animals at both time points. Pairwise comparisons of samples identified several hundred gonad-enriched transcripts, including most known Z1/Z4-enriched mRNAs, and reporter analysis confirmed the effectiveness of this approach. Prior to the Z1/Z4 division few sex-biased Z1/Z4 transcripts were detectable, but less than six hours later, we identified more than 250 sex-biased transcripts in the Z1/Z4 daughters, of which about a third were enriched in the somatic gonad cells compared to cells from whole animals. This indicates that a robust sex-biased developmental program, some of it gonad-specific, initiates in these cells around the time of the first Z1/Z4 division. Cell-specific analysis also identified approximately 70 previously unannotated mRNA isoforms that are enriched in Z1/Z4 or their daughters. Our data suggest that early sex differentiation in the gonad is controlled by a relatively small suite of differentially expressed genes, even after dimorphism has become apparent. Overall design: 20 total sample: two time points, two sexes, and gonadal cells or whole animals. The earlier time point was collected in triplicate and was harvested 9.5 hours after starved, hatched L1s were fed. The later time point was collected in duplicate and was harvested 15 hour after starved, hatched L1 were fed. Replicates of either dissociated whole animals or gonadal cells (Z1/Z4 or Z1/Z4 daughter) from both male and hermaphrodites were harvested for each time point.