Human cancers often carry many somatically acquired genomic rearrangements, some of which may be implicated in cancer development. However, conventional strategies for characterizing rearrangements are laborious and low-throughput and have low sensitivity or poor resolution. We used massively parallel sequencing to generate sequence reads from both ends of short DNA fragments derived from the genomes of two individuals with lung cancer. By investigating read pairs that did not align correctly with respect to each other on the reference human genome, we characterized 306 germline structural variants and 103 somatic rearrangements to the base-pair level of resolution. The patterns of germline and somatic rearrangement were markedly different. Many somatic rearrangements were from amplicons, although rearrangements outside these regions, notably including tandem duplications, were also observed. Some somatic rearrangements led to abnormal transcripts, including two from internal tandem duplications and two fusion transcripts created by interchromosomal rearrangements. Germline variants were predominantly mediated by retrotransposition, often involving AluY and LINE elements. The results demonstrate the feasibility of systematic, genome-wide characterization of rearrangements in complex human cancer genomes, raising the prospect of a new harvest of genes associated with cancer using this strategy.