We describe Strelka2 (https://github.com/Illumina/strelka), an open-source small-variant-calling method for research and clinical germline and somatic sequencing applications. Strelka2 introduces a novel mixture-model-based estimation of insertion/deletion error parameters from each sample, an efficient tiered haplotype-modeling strategy, and a normal sample contamination model to improve liquid tumor analysis. For both germline and somatic calling, Strelka2 substantially outperformed the current leading tools in terms of both variant-calling accuracy and computing cost.