BACKGROUND: With the advent of next generation sequencing it has become possible to detect genomic variation on a large scale. However, predicting which genomic variants are damaging to gene function remains a challenge, as knowledge of the effects of genomic variation on gene expression is still limited. Recombinant inbred panels are powerful tools to study the cis and trans effects of genetic variation on molecular phenotypes such as gene expression. RESULTS: We generated a comprehensive inventory of genomic differences between the two founder strains of the rat HXB/BXH recombinant inbred panel: SHR/OlaIpcv and BN-Lx/Cub. We identified 3.2 million single nucleotide variants, 425,924 small insertions and deletions, 907 copy number changes and 1,094 large structural genetic variants. RNA-sequencing analyses on liver tissue of the two strains identified 532 differentially expressed genes and 40 alterations in transcript structure. We identified both coding and non-coding variants that correlate with differential expression and alternative splicing. Furthermore, structural variants, in particular gene duplications, show a strong correlation with transcriptome alterations. CONCLUSIONS: We show that the panel is a good model for assessing the genetic basis of phenotypic heterogeneity and for providing insights into possible underlying molecular mechanisms. Our results reveal a high diversity and complexity underlying quantitative and qualitative transcriptional differences.