Capacitance extraction is an important problem that has been extensively studied. This paper presents a significant improvement for the fast multipole accelerated boundary element method. We first introduce an algebraic transformation to convert the n ? n dense capacitance coefficient matrix into a sparse matrix with O(n) nonzero entries. We then use incomplete Cholesky factorization or incomplete LU factorization to produce an effective preconditioner for the sparse linear system. Simulation results show that our algorithm drastically reduces the number of iterations needed to solve the linear system associated with the boundary element method. For the k ? k bus crossing benchmark, our algorithm uses 3-4 iterations, compared to 10-20 iterations used by the previous algorithms such as FastCap [1] and HiCap [2]. As a result, our algorithm is 2-20 times faster than those algorithms. Our algorithm is also superior to the multi-scale method [3] because our preconditioner reduces the numbe...