Estimates of relatedness have several applications such as the identification of relatives or in identifying disease related genes through identity by descent (IBD) mapping. Here we present a new method for identifying IBD tracts among individuals from genome-wide single nucleotide polymorphisms data. We use a continuous time Markov model where the hidden states are the number of alleles shared IBD between pairs of individuals at a given position. In contrast to previous methods, our method accurately accounts for linkage disequilibrium using pairwise haplotype probabilities. The method provides a map of the local relatedness along the genome. We illustrate the potential of the method for mapping disease genes on a real data set, and show that the method has the potential to map causative disease mutations using only a handful of affected individuals. The new IBD mapping method provides considerable improvement in mapping power in natural populations compared to standard association mapping methods.