Abstract Many hard and soft corals harbor algae for photosynthesis. The algae live inside coral cells in a specialized membrane compartment called symbiosome, which shares the photosynthetically fixed carbon with coral host cells, while host cells provide inorganic carbon for photosynthesis 1 . This endosymbiotic relationship is critical for corals, but increased environmental stresses are causing corals to expel their endosymbiotic algae, i.e. coral bleaching, leading to coral death and degradation of marine ecosystem 2 . To date, the molecular pathways that orchestrate algal recognition, uptake, and maintenance in coral cells remain poorly understood. We report chromosome-level genome assembly of a fast-growing soft coral, Xenia species ( sp. ) 3 , and its use as a model to decipher the coral-algae endosymbiosis. Single cell RNA-sequencing (scRNA-seq) identified 13 cell types, including gastrodermis and cnidocytes, in Xenia sp . Importantly, we identified the endosymbiotic cell type that expresses a unique set of genes implicated in the recognition, phagocytosis/endocytosis, maintenance of algae, and host coral cell immune modulation. By applying scRNA-seq to investigate algal uptake in our new Xenia sp .. regeneration model, we uncovered a dynamic lineage progression from endosymbiotic progenitor state to mature endosymbiotic and post-endosymbiotic cell states. The evolutionarily conserved genes associated with the endosymbiotic process reported herein open the door to decipher common principles by which different corals uptake and expel their endosymbionts. Our study demonstrates the potential of single cell analyses to examine the similarities and differences of the endosymbiotic lifestyle among different coral species.