In the growing field of genomics, multiple alignment programs are confronted with ever increasing amounts of data. To address this growing issue we have dramatically improved the running time and memory requirement of Kalign, while maintaining its high alignment accuracy. Kalign version 2 also supports nucleotide alignment, and a newly introduced extension allows for external sequence annotation to be included into the alignment procedure. We demonstrate that Kalign2 is exceptionally fast and memory-efficient, permitting accurate alignment of very large numbers of sequences. The accuracy of Kalign2 compares well to the best methods in the case of protein alignments while its accuracy on nucleotide alignments is generally superior. In addition, we demonstrate the potential of using known or predicted sequence annotation to improve the alignment accuracy. Kalign2 is freely available for download from the Kalign web site (http://msa.sbc.su.se/).