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High-throughput RNA sequencing enables quantification of transcripts (both known and novel), exon/exon junctions and fusions of exons from different genes. Discovery of gene fusions-particularly those expressed with low abundance- is a challenge with short- and medium-length sequencing reads. To address this challenge, we built a mapping pipeline with features including filter and junction mapping, annotation specific pairing rescue and accurate mapping quality values. We combined this pipeline with a suffix array spliced read alignment algorithm to sensitively detect RNA splicing and gene fusion events. Performing paired-end RNA-Seq of the breast cancer cell line MCF-7 using the SOLiD system, we called 40 gene fusions among over 120,000 splicing junctions. We validated 36 of these 40 fusions, of which 25 were expressed specifically in MCF-7. We further explore possible extension of suffix arrays, and other alignment strategies for longer Ion Torrent reads.