We have developed FusionSeq to identify fusion transcripts from paired-end RNA-sequencing. FusionSeq includes filters to remove spurious candidate fusions with artifacts, such as misalignment or random pairing of transcript fragments, and it ranks candidates according to several statistics. It also has a module to identify exact sequences at breakpoint junctions. FusionSeq detected known and novel fusions in a specially sequenced calibration data set, including eight cancers with and without known rearrangements.