Diatoms are one of the most successful and ecologically important groups of eukaryotic phytoplankton in the modern ocean. Deciphering their genomes is a key step towards better understanding of their biological innovations, evolutionary origins, and ecological underpinnings. Here, we have used 90 RNA-Seq datasets from different growth conditions combined with published expressed sequence tags and protein sequences from multiple taxa to explore the genome of the model diatom Phaeodactylum tricornutum, and introduce 1,489 novel genes. The new annotation additionally permitted the discovery of extensive alternative splicing in diatoms, including intron retention and exon skipping, which increase the diversity of transcripts generated in changing environments. In addition, we have used up-to-date reference sequence libraries to dissect the taxonomic origins of diatom genes. We show that the P. tricornutum genome is enriched in lineage-specific genes, with up to 47% of the gene models present only possessing orthologues in other stramenopile groups. Finally, we have performed a comprehensive de novo annotation of repetitive elements showing novel classes of transposable elements such as SINE, MITE and TRIM/LARD. This work provides a solid foundation for future studies of diatom gene function, evolution and ecology.