Jellyfish (medusae) are a distinctive life-cycle stage of medusozoan cnidarians. They are major marine predators, with integrated neurosensory, muscular and organ systems. The genetic foundations of this complex form are largely unknown. We report the draft genome of the hydrozoan jellyfish Clytia hemisphaerica and use multiple transcriptomes to determine gene use across life-cycle stages. Medusa, planula larva and polyp are each characterized by distinct transcriptome signatures reflecting abrupt life-cycle transitions and all deploy a mixture of phylogenetically old and new genes. Medusa-specific transcription factors, including many with bilaterian orthologues, associate with diverse neurosensory structures. Compared to Clytia, the polyp-only hydrozoan Hydra has lost many of the medusa-expressed transcription factors, despite similar overall rates of gene content evolution and sequence evolution. Absence of expression and gene loss among Clytia orthologues of genes patterning the anthozoan aboral pole, secondary axis and endomesoderm support simplification of planulae and polyps in Hydrozoa, including loss of bilateral symmetry. Consequently, although the polyp and planula are generally considered the ancestral cnidarian forms, in Clytia the medusa maximally deploys the ancestral cnidarian-bilaterian transcription factor gene complement.