De novo sequencing of peptides using tandem MS is difficult due to missing fragment ions in the spectra commonly obtained after CID of peptide precursor ions. Complementing CID spectra with spectra obtained in an ion-trap mass spectrometer upon electron transfer dissociation (ETD) significantly increases the sequence coverage with diagnostic ions. In the de novo sequencing algorithm CompNovo presented here, a divide-and-conquer approach was combined with an efficient mass decomposition algorithm to exploit the complementary information contained in CID and ETD spectra. After optimizing the parameters for the algorithm on a well-defined training data set obtained for peptides from nine known proteins, the CompNovo algorithm was applied to the de novo sequencing of peptides derived from a whole protein extract of Sorangium cellulosum bacteria. To 2406 pairs of CID and ETD spectra contained in this data set, 675 fully correct sequences were assigned, which represent a success rate of 28.1%. It is shown that the CompNovo algorithm yields significantly improved sequencing accuracy as compared with published approaches using only CID spectra or combined CID and ETD spectra.