Using new strings, setting up the intonation etc can really help.
If you're using it in a studio setting there's all kindsa things you can do.

On the PhaseIV Cd I did, all I used was a cheap $20 Diatone.
The way to make it sound better is to use a good mic, EQ it so that the bottom end is cut out a bit. Use a decent amp.
The other way is to avoid playing notes that are out of tune.

For instance, I retuned the guitar so that it played certain notes perfectly. But if I attempted to play anything else it went way out of tune.

On older recordings, all I used was a $20 diatone.
Even on recent recordings, I just use a Yamaha Eterna I got off eBay for $100.

For instance, on this recording, I used the diatone:

http://s9374450.onlinehome.us/mp3/GoodNight.F.mp3

It majorly sucked for keeping in tune but after a bunch of studio trickery it melded in ok.
Mostly I doubletracked it and panned the two tracks to the extreme left and right... then used compression to smooth out the sound.
Then I ran it through Amplitube to get an AC-30 amp simultator.