Background: In this study, we present a robust and reliable computational method for tag-togene assignment in serial analysis of gene expression (SAGE). The method relies on current genome information and annotation, incorporation of several new features, and key improvements over alternative methods, all of which are important to determine gene expression levels more accurately. The method provides a complete annotation of potential virtual SAGE tags within a genome, along with an estimation of their confidence for experimental observation that ranks tags that present multiple matches in the genome. Results: We applied this method to the Saccharomyces cerevisiae genome, producing the most thorough and accurate annotation of potential virtual SAGE tags that is available today for this organism. The usefulness of this method is exemplified by the significant reduction of ambiguous cases in existing experimental SAGE data. In addition, we report new insights from the analysis of existin...