Abstract. This paper proposes the use of Latent Semantic Indexing (LSI) techniques, decomposed with semi-discrete matrix decomposition (SDD) method, for text categorization. The SDD algorithm is a recent solution to LSI, which can achieve similar performance at a much lower storage cost. In this paper, LSI is used for text categorization by constructing new features of category as combinations or transformations of the original features. In the experiments on data set of Chinese Library Classification we compare accuracy to a classifier based on k-Nearest Neighbor (k-NN) and the result shows that k-NN based on LSI is sometimes significantly better. Much future work remains, but the results indicate that LSI is a promising technique for text categorization.