Insertion and deletion (indel) mutations, which can trigger single nucleotide substitutions on the flanking regions of genes, may generate abundant materials for disease defense, reproduction, species survival and evolution. However, genetic and evolutionary mechanisms of indels remain elusive. We establish a comparative genome-transcriptome-alignment approach for a large-scale identification of indels in Monopterus population. Over 2000 indels in 1738 indel genes, including 1–21 bp deletions and 1–15 bp insertions, were detected. Each indel gene had ∼1.1 deletions/insertions, and 2–4 alleles in population. Frequencies of deletions were prominently higher than those of insertions on both genome and population levels. Most of the indels led to in frame mutations with multiples of three and majorly occurred in non-domain regions, indicating functional constraint or tolerance of the indels. All indel genes showed higher expression levels than non-indel genes during sex reversal. Slide window analysis of global expression levels in gonads showed a significant positive correlation with indel density in the genome. Moreover, indel genes were evolutionarily conserved and evolved slowly compared to non-indel genes. Notably, population genetic structure of indels revealed divergent evolution of Monopterus population, as bottleneck effect of biogeographic isolation by Taiwan Strait, China.