Transposable elements (TEs) are ubiquitous components of eukaryotic genomes that impact many aspects of genome function. TE detection in genomic sequences is typically performed using similarity searches against a set of reference sequences built from previously identified TEs. Here, we demonstrate that this process can be improved by designing reference sets that incorporate key aspects of the structure and evolution of TEs and by combining these sets with Repbase Update (RU), which is composed mainly of consensus sequences. Using the Arabidopsis genome as a test case, our approach leads to the detection of an extra 12.4% of TE sequences. These correspond to novel TE fragments as well as to the extension of TE fragments already detected by RU. Significantly, we find that TE detection could be readily optimized using only two reference sets, one containing true consensus sequences and the other mosaic sequences that capture the structural diversity of TE copies within a family.