We have developed an ab initio protein structure prediction method called chunk-TASSER that uses ab initio folded supersecondary structure chunks of a given target as well as threading templates for obtaining contact potentials and distance restraints. The predicted chunks, selected on the basis of a new fragment comparison method, are folded by a fragment insertion method. Full-length models are built and refined by the TASSER methodology, which searches conformational space via parallel hyperbolic Monte Carlo. We employ an optimized reduced force field that includes knowledge-based statistical potentials and restraints derived from the chunks as well as threading templates. The method is tested on a dataset of 425 hard target proteins < or =250 amino acids in length. The average TM-scores of the best of top five models per target are 0.266, 0.336, and 0.362 by the threading algorithm SP(3), original TASSER and chunk-TASSER, respectively. For a subset of 80 proteins with predicted alpha-helix content > or =50%, these averages are 0.284, 0.356, and 0.403, respectively. The percentages of proteins with the best of top five models having TM-score > or =0.4 (a statistically significant threshold for structural similarity) are 3.76, 20.94, and 28.94% by SP(3), TASSER, and chunk-TASSER, respectively, overall, while for the subset of 80 predominantly helical proteins, these percentages are 2.50, 23.75, and 41.25%. Thus, chunk-TASSER shows a significant improvement over TASSER for modeling hard targets where no good template can be identified. We also tested chunk-TASSER on 21 medium/hard targets <200 amino-acids-long from CASP7. Chunk-TASSER is approximately 11% (10%) better than TASSER for the total TM-score of the first (best of top five) models. Chunk-TASSER is fully automated and can be used in proteome scale protein structure prediction.