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Highly parallel SNP genotyping platforms have been developed for some important crop species, but these platforms typically carry a high cost per sample for first-time or small-scale users. In contrast, recently developed genotyping by sequencing (GBS) approaches offer a highly cost effective alternative for simultaneous SNP discovery and genotyping. In the present investigation, we have explored the use of GBS in soybean. In addition to developing a novel analysis pipeline to call SNPs and indels from the resulting sequence reads, we have devised a modified library preparation protocol to alter the degree of complexity reduction. We used a set of eight diverse soybean genotypes to conduct a pilot scale test of the protocol and pipeline. Using ApeKI for GBS library preparation and sequencing on an Illumina GAIIx machine, we obtained 5.5 M reads and these were processed using our pipeline. A total of 10,120 high quality SNPs were obtained and the distribution of these SNPs mirrored closely the distribution of gene-rich regions in the soybean genome. A total of 39.5% of the SNPs were present in genic regions and 52.5% of these were located in the coding sequence. Validation of over 400 genotypes at a set of randomly selected SNPs using Sanger sequencing showed a 98% success rate. We then explored the use of selective primers to achieve a greater complexity reduction during GBS library preparation. The number of SNP calls could be increased by almost 40% and their depth of coverage was more than doubled, thus opening the door to an increase in the throughput and a significant decrease in the per sample cost. The approach to obtain high quality SNPs developed here will be helpful for marker assisted genomics as well as assessment of available genetic resources for effective utilisation in a wide number of species.