Abstract Motivation: For many complex traits/diseases, it is believed that rare variants account for some of the missing heritability that cannot be explained by common variants. Sequencing a large number of samples through DNA pooling is a cost-effective strategy to discover rare variants and to investigate their associations with phenotypes. Overlapping pool designs provide further benefit because such approaches can potentially identify variant carriers, which is important for downstream applications of association analysis of rare variants. However, existing algorithms for analysing sequence data from overlapping pools are limited. Results: We propose a complete data analysis framework for overlapping pool designs, with novelties in all three major steps: variant pool and variant locus identification, variant allele frequency estimation and variant sample decoding. The framework can be used in combination with any design matrix. We have investigated its performance based on two different overlapping designs and have compared it with three state-of-the-art methods, by simulating targeted sequencing and by pooling real sequence data. Results on both datasets show that our algorithm has made significant improvements over existing ones. In conclusion, successful discovery of rare variants and identification of variant carriers using overlapping pool strategies critically depend on many steps, from generation of design matrixes to decoding algorithms. The proposed framework in combination with the design matrixes generated based on the Chinese remainder theorem achieves best overall results. Availability: Source code of the program, termed VIP for Variant Identification by Pooling, is available at http://cbc.case.edu/VIP. Contact: jingli@cwru.edu Supplementary information: Supplementary data are available at Bioinformatics online.