Background Sugarcane is an important global food crop and energy resource. To facilitate the sugarcane improvement program, genome and gene information are important for studying traits at the molecular level. Most currently available transcriptome data for sugarcane were generated using second-generation sequencing platforms, which provide short reads. The de novo assembled transcripts from these data are limited in length, and hence may be incomplete and inaccurate, especially for long RNAs. Methods We generated a transcriptome dataset of leaf tissue from a commercial Thai sugarcane cultivar Khon Kaen 3 (KK3) using PacBio RS II single-molecule long-read sequencing by the Iso-Seq method. Short-read RNA-Seq data were generated from the same RNA sample using the Ion Proton platform for reducing base calling errors. Results A total of 119,339 error-corrected transcripts were generated with the N50 length of 3,611 bp, which is on average longer than any previously reported sugarcane transcriptome dataset. 110,253 sequences (92.4%) contain an open reading frame (ORF) of at least 300 bp long with ORF N50 of 1,416 bp. The mean lengths of 5′ and 3′ untranslated regions in 73,795 sequences with complete ORFs are 1,249 and 1,187 bp, respectively. 4,774 transcripts are putatively novel full-length transcripts which do not match with a previous Iso-Seq study of sugarcane. We annotated the functions of 68,962 putative full-length transcripts with at least 90% coverage when compared with homologous protein coding sequences in other plants. Discussion The new catalog of transcripts will be useful for genome annotation, identification of splicing variants, SNP identification, and other research pertaining to the sugarcane improvement program. The putatively novel transcripts suggest unique features of KK3, although more data from different tissues and stages of development are needed to establish a reference transcriptome of this cultivar.