BACKGROUND: The development of long-read sequencing is promising for the high-quality and comprehensive de novo assembly for various species around the world. However, it is still challenging for assemblers to handle thousands of genomes, tens of gigabase-level assembly sizes, and terabase-level datasets efficiently, which is a bottleneck to large-scale de novo sequencing studies. A major cause is the read overlapping graph construction that state-of-the-art tools usually have to cost terabyte-level RAM space and tens of days for large genomes. Such lower performance and scalability are not suited to handle the numerous samples being sequenced. FINDINGS: Herein, we propose xRead, a novel iterative overlapping graph construction approach that achieves high performance, scalability, and yield simultaneously. Under the guidance of its coverage-based model, xRead converts read-overlapping to heuristic read-mapping and incremental graph construction tasks with highly controllable RAM space and faster speed. It enables the processing of very large datasets (such as the 1.28 Tb Ambystoma mexicanum dataset) with less than 64 GB RAM and obviously lower time costs. Moreover, benchmarks suggest that it can produce highly accurate and well-connected overlapping graphs, which are also supportive of various kinds of downstream assembly strategies. CONCLUSIONS: xRead is able to break through the major bottleneck to graph construction and lays a new foundation for de novo assembly. This tool is suited to handle a large number of datasets from large genomes and may play important roles in many de novo sequencing studies.