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Abstract Background mRNA-Seq technology has revolutionized the field of transcriptomics for identification and quantification of gene transcripts not only at gene level but also at isoform level. Estimating the expression levels of transcript isoforms from mRNA-Seq data is a challenging problem due to the presence of constitutive exons. Results We propose a novel algorithm (IsoformEx) that employs weighted non-negative least squares estimation method to estimate the expression levels of transcript isoforms. Validations based on in silico simulation of mRNA-Seq and qRT-PCR experiments with real mRNA-Seq data showed that IsoformEx could accurately estimate transcript expression levels. In comparisons with published methods, the transcript expression levels estimated by IsoformEx showed higher correlation with known transcript expression levels from simulated mRNA-Seq data, and higher agreement with qRT-PCR measurements of specific transcripts for real mRNA-Seq data. Conclusions IsoformEx is a fast and accurate algorithm to estimate transcript expression levels and gene expression levels, which takes into account short exons and alternative exons with a weighting scheme. The software is available at http://bioinformatics.wistar.upenn.edu/isoformex.