Sensitive methods for detection of cell-free RNA (cfRNA) could facilitate non-invasive gene expression profiling and monitoring of diseases. Here we describe RARE-seq (random priming and affinity capture of cfRNA fragments for enrichment analysis by sequencing), a method optimized for cfRNA analysis. We demonstrate that platelet contamination can substantially confound cfRNA analyses and develop an approach to overcome it. In analytical validations, we find RARE-seq to be approximately 50-fold more sensitive for detecting tumour-derived cfRNA than whole-transcriptome RNA sequencing (RNA-seq), with a limit of detection of 0.05%. To explore clinical utility, we profiled 437 plasma samples from 369 individuals with cancer or non-malignant conditions and controls. Detection of non-small-cell lung cancer expression signatures in cfRNA increased with stage (6 out of 20 (30%) in stage I; 5 out of 8 (63%) in stage II; 10 out of 15 (67%) in stage III; 80 out of 96 (83% sensitivity) in stage IV at 95% specificity) and RARE-seq was more sensitive than tumour-naive circulating tumour DNA (ctDNA) analysis. In patients with EGFR-mutant non-small-cell lung cancer who developed resistance to tyrosine kinase inhibitors, we detected both histological transformation and mutation-based resistance mechanisms. Finally, we demonstrate the potential utility of RARE-seq for determination of tissue of origin, assessing benign pulmonary conditions and tracking response to mRNA vaccines. These results highlight the potential value of ultrasensitive cfRNA analysis and provide proof of concept for diverse clinical applications.