The effective size of an L2 cache can be increased by using a dictionary-based compression scheme. Naive application of this idea performs poorly since the data values in a cache greatly vary in their “compressibility.” The novelty of this paper is a scheme that dynamically partitions the cache into sections of different compressibilities. While compression is often researched in the context of a large stream, in this work it is applied repeatedly on smaller cache-line sized blocks so as to preserve the random access requirement of a cache. When a cache-line is brought into the L2 cache or the cache-line is to be modified, the line is compressed using a dynamic, LZW dictionary. Depending on the compression, it is placed into the relevant partition. The partitioning is dynamic in that the ratio of space allocated to compressed and uncompressed varies depending on the actual performance, Certain SPEC-2000 benchmarks using a compressed L2 cache show an 80reduction in L2 miss-rate when compared to using an uncompressed L2 cache of the same area, taking into account all area overhead associated with the compression circuitry. For other SPEC-2000 benchmarks, the compressed cache performs as well as a traditional cache that is 4.3 times as large as the compressed cache in terms of hit rate, The adaptivity ensures that, in terms of miss rates, the compressed cache never performs worse than a traditional cache. / Singapore-MIT Alliance (SMA)