We developed the Rainbow-seq technology to trace cell division history and reveal single-cell transcriptomes. With distinct fluorescent protein genes as lineage markers, Rainbow-seq enables each single-cell RNA sequencing (RNA-seq) experiment to simultaneously decode the lineage marker genes and read single-cell transcriptomes. We triggered lineage tracking in each blastomere at the 2-cell stage, observed microscopically inequivalent contributions of the progeny to the two embryonic poles at the blastocyst stage, and analyzed every single cell at either 4- or 8-cell stage with deep paired-end sequencing of full-length transcripts. Although lineage difference was not marked unequivocally at a single-gene level, it became clear when the transcriptome was analyzed as a whole. Moreover, several groups of novel transcript isoforms with embedded repeat sequences exhibited lineage difference, suggesting a possible link between DNA demethylation and cell fate decision. Rainbow-seq bridged a critical gap between division history and single-cell RNA-seq assays.