We present a dictionary-based test data compression approach for reducing test data volume and testing time in SOCs. The proposed method is based on the use of a small number of ATE channels to deliver compressed test patterns from the tester to the chip and to drive a large number of internal scan chains in the circuit under test. Therefore, it is especially suitable for a reduced pin-count and low-cost DFT test environment, where a narrow interface between the tester and the SOC is desirable. The dictionary-based approach not only reduces testing time but it also eliminates the need for additional synchronization and handshaking between the SOC and the ATE. The dictionary entries are determined during the compression procedure by solving a variant of the well-known clique partitioning problem from graph theory. Experimental results for the ISCAS-89 benchmarks and representative test data from IBM show that the proposed method outperforms a number of recently-proposed test data compression techniques.