Abstract Motivation The variation graph toolkit (VG) represents genetic variation as a graph. Although each path in the graph is a potential haplotype, most paths are non-biological, unlikely recombinations of true haplotypes. Results We augment the VG model with haplotype information to identify which paths are more likely to exist in nature. For this purpose, we develop a scalable implementation of the graph extension of the positional Burrows–Wheeler transform. We demonstrate the scalability of the new implementation by building a whole-genome index of the 5008 haplotypes of the 1000 Genomes Project, and an index of all 108 070 Trans-Omics for Precision Medicine Freeze 5 chromosome 17 haplotypes. We also develop an algorithm for simplifying variation graphs for k-mer indexing without losing any k-mers in the haplotypes. Availability and implementation Our software is available at https://github.com/vgteam/vg, https://github.com/jltsiren/gbwt and https://github.com/jltsiren/gcsa2. Supplementary information Supplementary data are available at Bioinformatics online.