Cancers are caused by the accumulation of genomic alterations. Therefore, analyses of cancer genome sequences and structures provide insights for understanding cancer biology, diagnosis and therapy. The application of second-generation DNA sequencing technologies (also known as next-generation sequencing) — through whole-genome, whole-exome and whole-transcriptome approaches — is allowing substantial advances in cancer genomics. These methods are facilitating an increase in the efficiency and resolution of detection of each of the principal types of somatic cancer genome alterations, including nucleotide substitutions, small insertions and deletions, copy number alterations, chromosomal rearrangements and microbial infections. This Review focuses on the methodological considerations for characterizing somatic genome alterations in cancer and the future prospects for these approaches.