One major limitation with the majority of recently developed methods for RNA-Seq differential expression is the dependency on annotated biological features to detect expression differences across samples. This forces the identification of expression levels and the detection of significant changes to known genomic regions.Thus, any significant changes occurring in unannotated regions will not be captured.To overcome this limitation, we developed a novel segmentation approach, Island-Based (IBSeq), for analyzing differential expression in RNA-Seq and targeted sequencing (exome capture) data without specific knowledge of an isoform. IBSeq vii segmentation determines individual islands of expression based on windowed read counts that can be compared across experimental conditions to determine differential island expression. In order to detect differentially expressed features, the significance of DE islands corresponding to each feature are combined using combined p-value methods. We evaluated the performance of our approach by comparing it to a number of existing gene DE methods using several benchmark MAQC RNA-Seq datasets.Using the area under ROC curve (auROC) as a performance metric, results show that IBSeq clearly outperforms all other methods compared.viii