Despite the expanding interest in bacterial viruses (bacteriophages), insights into the intracellular development of bacteriophage and its impact on bacterial physiology are still scarce. Here we investigate during lytic infection the whole-genome transcription of the giant phage vB_YecM_φR1-37 (φR1-37) and its host, the gastroenteritis causing bacterium Yersinia enterocolitica. RNA sequencing reveals that the gene expression of φR1-37 does not follow a pattern typical observed in other lytic bacteriophages, as only selected genes could be classified as typically early, middle or late genes. The majority of the genes appear to be expressed constitutively throughout infection. Additionally, our study demonstrates that transcription occurs mainly from the positive strand, while the negative strand encodes only genes with low to medium expression levels. Interestingly, we also detected the presence of antisense RNA species, as well as one non-coding intragenic RNA species. Gene expression in the phage-infected cell is characterized by the broad replacement of host transcripts with phage transcripts. However, the host response in the late phase of infection was also characterized by up-regulation of several specific bacterial gene products known to be involved in stress response and membrane stability, including the Cpx pathway regulators, ABC transporters, phage- and cold-shock proteins.