We have developed a method that combines the ROSETTA de novo protein folding and refinement protocol with distance constraints derived from homologous structures to build homology models that are frequently more accurate than their templates. We test this method by building complete-chain models for a benchmark set of 22 proteins, each with 1 or 2 candidate templates, for a total of 39 test cases. We use structure-based and sequence-based alignments for each of the test cases. All atoms, including hydrogens, are represented explicitly. The resulting models contain approximately the same number of atomic overlaps as experimentally determined crystal structures and maintain good stereochemistry. The most accurate models can be identified by their energies, and in 22 of 39 cases a model that is more accurate than the template over aligned regions is one of the 10 lowest-energy models.