The free-living flatworm, Macrostomum lignano has an impressive regenerative capacity. Following injury, it can regenerate almost an entirely new organism because of the presence of an abundant somatic stem cell population, the neoblasts. This set of unique properties makes many flatworms attractive organisms for studying the evolution of pathways involved in tissue self-renewal, cellfate specification, and regeneration. The use of these organisms as models, however, is hampered by the lack of a well-assembled and annotated genome sequences, fundamental to modern genetic and molecular studies. Here we report the genomic sequence of M. lignano and an accompanying characterization of its transcriptome. The genome structure of M. lignano is remarkably complex, with ∼75% of its sequence being comprised of simple repeats and transposon sequences. This has made high-quality assembly from Illumina reads alone impossible (N50 = 222 bp). We therefore generated 130× coverage by long sequencing reads from the Pacific Biosciences platform to create a substantially improved assembly with an N50 of 64 Kbp. We complemented the reference genome with an assembled and annotated transcriptome, and used both of these datasets in combination to probe gene-expression patterns during regeneration, examining pathways important to stem cell function.F latworms belong to the superphylum Lophotrochozoa, a vast assembly of protostome invertebrates (1, 2) (Fig. 1A). The evolutionary relationships within this clade are poorly resolved and the specific position of flatworms is currently debated (3, 4). Flatworms have attracted scientific attention for centuries because of their astonishing regenerative capabilities (5, 6), as well as their ability to "degrow" in a controlled way when starved (7). As far back as the early 1900s, Thomas Morgan recognized the potential of flatworms and conducted a number of fascinating regeneration experiments on planarian flatworms before his focus shifted to Drosophila genetics (8).Macrostomum lignano is (Fig. 1B), a free-living, regenerating flatworm isolated from the coast of the Mediterranean Sea. M. lignano is an obligatorily cross-fertilizing simultaneous hermaphrodite (9) that belongs to Macrostomorpha, whereas the other often-studied freeliving flatworms and human parasitic flatworms all belong to clades that are potentially more derived (less ancestral) in comparison with Macrostomorpha (2) (Fig. 1C).Many flatworms can regenerate nearly their entire body or amputated organs. This regenerative capacity is thought to be attributable to the presence of somatic stem cells, termed neoblasts (10, 11). In Schmidtea mediterranea (planarian flatworm), even a single transplanted neoblast has the ability to rescue, regenerate, and change the genotype of a fatally irradiated worm (12). M. lignano can regenerate every tissue, with the exception of the head region containing the brain (13,14).Neoblasts in M. lignano ( Fig. 1 D and E), in contrast to most vertebrate somatic stem cells, are plentiful, making up about ...