The computer program DAIM (Decomposition and Identification of Molecules) has been developed to automatically break up compounds in small-molecule libraries for fragment-based docking as well as database analysis. Here, DAIM is evaluated on 130 ligands derived from known crystal structures of ligand-protein complexes. The decomposition and a new fingerprint-based identification technique are used to select anchor fragments for docking. The docking results show that the DAIM selection is superior to size-based or random selection of fragments. To evaluate the usefulness for analyzing the fragment composition of a large library, DAIM is applied to a collection of about 1.85 million commercially available compounds. Interestingly, it is found that the set of most frequent cyclic and acyclic fragments originating from the decomposition of the 1.85 million molecules shows a large overlap with the most frequent fragments in a library of 5120 known drugs. DAIM has been successfully used in the in silico screening for inhibitors of β-secretase and EphB4 kinase by fragment-based high-throughput docking. Possible future applications for de novo ligand design are briefly discussed.