Root-knot nematodes (Meloidogyne spp.) are widely spread root parasites that infect thousands of vascular plant species. These highly polyphagous nematodes engage in sophisticated interactions with host plants that results in the formation of knot-like structures known as galls whose ontogeny remains largely unknown. Here, we determined transcriptome changes and alternative splicing variants induced by Megalaima incognita in galls and neighboring root cells at two distinct infective stages. M. incognita induced substantial transcriptome changes in tomato roots both locally in galls and systemically in neighboring cells. A considerable parallel regulation of gene expression in galls and neighboring cells were detected, indicative of effective intercellular communications exemplified by suppression of basal defense responses particularly during the early stage of infection. The transcriptome analysis also revealed that M. incognita exerts a tight control over the cell cycle process as a whole that results in an increase of ploidy levels in the feeding sites and accelerated mitotic activity of the gall cells. Alternative splicing analysis indicated that M. incognita significantly modulates pre-mRNA splicing as a total of 9064 differentially spliced events from 2898 genes were identified where intron retention and exon skipping events were largely suppressed. Furthermore, a number of differentially spliced events were functionally validated using transgenic hairy root system and found to impact gall formation and nematode egg mass production. Together, our data provide unprecedented insights into the transcriptome and spliceome reprogramming induced by M. incognita in tomato with respect to gall ontogeny and nematode parasitism.