Single-molecule sequencing instruments can generate multikilobase sequences with the potential to greatly improve genome and transcriptome assembly. However, the error rates of single-molecule reads are high, which has limited their use thus far to resequencing bacteria. To address this limitation, we introduce a correction algorithm and assembly strategy that uses short, high-fidelity sequences to correct the error in single-molecule sequences. We demonstrate the utility of this approach on reads generated by a PacBio RS instrument from phage, prokaryotic and eukaryotic whole genomes, including the previously unsequenced genome of the parrot Melopsittacus undulatus, as well as for RNA-Seq reads of the corn (Zea mays) transcriptome. Our long-read correction achieves >99.9% base-call accuracy, leading to substantially better assemblies than current sequencing strategies: in the best example, the median contig size was quintupled relative to high-coverage, second-generation assemblies. Greater gains are predicted if read lengths continue to increase, including the prospect of single-contig bacterial chromosome assembly.