In VLSI design circuits, System-On-Chip consumes more area due to huge data volume in the hardware. In order to reduce that constraint, the size of the trace buffer should be maintained constant. The trace data should be compressed to acquire huge amount of data. To compress those data several conventional techniques has been followed. Here in the proposed system, an approach called Look-Up-Table based dictionary compression method for System-On-Chip is used. It implements dictionary in such way that the most of the test vector frequencies are calculated which is to compress the test data in an efficient manner. This compression technique holds three different test vectors of all zero’s, one’s and X’s value where most of benchmark circuitry frequency can be captured. This technique is implemented in those circuits using hardware description language and it is verified by XILINX Spartan-3E to know utilization of devices. Hence, it achieves more compression ratio with less area overhead without loss of data.