Abstract: A method and system for equivalence checking of logical circuits using iterative circuit reduction and satisfiability techniques provide improved performance in computer-based verification and design tools. By intertwining a structural satisfiability solver and binary decision diagram functional circuit reduction method, computer-based tools can make more efficient use of memory and decrease computation time required to equivalence check large logical networks. Using the circuit reduction technique back-to-back with the simulation technique, optimum local and global circuit reduction are simultaneously achieved. By iterating between the structural and functional techniques, and adjusting the size of sub-networks being analyzed within a larger network, sub-networks can be reduced or eliminated, decreasing the amount of memory required to represent the next larger inclusive network.