A distributed algorithm for solving the symbolic compaction problem based on the virtual grid approach is presented. The distributed layout compaction system (DLCS) is an implementation of this algorithm. The symbolic compaction problem consists of translating a symbolic description of a VLSI layout into the smallest possible mask level description without violating any design rule. The distributed algorithm follows the client/server model. Client/server communication is provided by remote procedure calls (RPC) and modified RPCs, that allow parallel computations. The client is responsible for partitioning the layout problem into separate regions to be compacted by a set of server processes, and for merging these separately compacted regions into the final mask descriptions. The partition strategy is shown to allow effective parallelism of the compaction problem. DLCS was tested using a standard set of symbolic compaction benchmarks.