Single-cell RNA sequencing (scRNA-seq) is revolutionizing the study of complex and dynamic cellular mechanisms. However, cell-type annotation remains a main challenge as it largely relies on manual curation, which is cumbersome and less accurate. The increasing number of scRNA-seq data sets, as well as numerous published genetic studies, motivated us to build a comprehensive human cell type reference atlas. Here, we present deCS (decoding Cell type-Specificity), an automatic cell type annotation method based on a comprehensive collection of human cell type expression profiles or a list of marker genes. We applied deCS to single-cell data sets from various tissue types, and systematically evaluated the annotation accuracy under various conditions, including reference panels, sequencing depth and feature selection. Our results demonstrated that expanding the references is critical for improving annotation accuracy. Compared to the existing state-of-the-art annotation tools, deCS significantly reduced computation time while increased accuracy. deCS can be integrated into the standard scRNA-seq analytical pipeline to enhance cell type annotation. Finally, we demonstrated the broad utility of deCS to identify trait-cell type associations in 51 human complex traits, providing deeper insight into the cellular mechanisms of disease pathogenesis.