The Online Books Page at the University of Pennsylvania carries over 35,000 books. There are fiction and nonfiction volumes in just about any subject you can name. Search by subject, title or author, and start reading by simply clicking on a book's title.
Wowio is a site that contains books to read for free online, or downloaded for a small charge. There are classic works in many genres, as well as modern books on many fiction and nonfiction subjects. Click on a book to reserve it in your library, then click on the book in your library to begin reading.
Project Gutenberg was the very first site online to produce free books to read. Totally produced by volunteers, it houses over 30,000 volumes in just about every subject. The books are online in HTML form for immediate reading, and also in various encoded forms for downloading into Palm readers or ebook readers.
Publicbookshelf.com is a site filled with all sorts of free romance novels to read online. They have contemporary romance, vampire romance, romantic suspense,western, general and history. All are free to read online.
Baen Books at baen.com is a science fiction and fantasy site. They offer free books in the genre for reading online or for download into a variety of ebook reader types. The free books are a mixture of classic works and newer publications.