Marine sponges associated microorganisms are considered to be prolific source of bioactive natural products. Omics-based techniques such as metagenomics and metatranscriptomics have been used as effective tools to discover natural products. In this study, we used integrated metagenomic and metatranscriptomic analysis of three samples of the Egyptian Red Sea sponge Theonella sp. microbiome to obtain a complete picture of its biosynthetic activity to produce bioactive compounds. Our data revealed high biodiversity of the Egyptian sponge microbiota represented by 38 bacterial phyla with Candidate Phylum Poribacteria as the most abundant phyla with an average of 27.5% of the microbial community. The analysis also revealed high biosynthetic activity of the sponge microbiome through detecting different types of biosynthetic gene clusters (BGCs) with predicted antibacterial, cytotoxic and inhibitory bioactivity and the majority of these clusters were found to be actively transcribed. The complete BGCs of the cytotoxic theonellamide and misakinolide were detected and found to be actively transcribed. The majority of the detected BGCs were predicted to be novel as they did not show any similarity with any known cluster in the MIBiG database.