Disclosed is a system and methods for data compression and decompression. The systems and methods discussed herein include an encoder, dictionary, decoder, literal string and control output. The discussed systems and methods encode data transmitted over a communications channel through the use of a dynamically compiled dictionary. Upon reviewing the characters within the transmitted data in view of the dictionary, an encoded/compressed output string is created. Such output string may also be decoded in a similar fashion via a dynamically compiled dictionary.