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Rainbow is developed to provide an ultra-fast and memory-efficient solution to clustering and assembling short reads produced by RAD-seq. First, Rainbow clusters reads using a spaced seed method. Then, Rainbow implements a heterozygote calling like strategy to divide potential groups into haplotypes in a top–down manner. And along a guided tree, it iteratively merges sibling leaves in a bottom–up manner if they are similar enough. Here, the similarity is defined by comparing the 2nd reads of a RAD segment. This approach tries to collapse heterozygote while discriminate repetitive sequences. At last, Rainbow uses a greedy algorithm to locally assemble merged reads into contigs. Rainbow not only outputs the optimal but also suboptimal assembly results. Based on simulation and a real guppy RAD-seq data, we show that Rainbow is more competent than the other tools in dealing with RAD-seq data