The most important task of a compiler designed to exploit instruction-level parallelism (ILP) is instruction scheduling. If higher levels of ILP are to be achieved, the compiler must use, as the unit of scheduling, regions consisting of multiple basic blocks--preferably those that frequently execute consecutively, and which capture cycles in the program's execution. Traditionally, compilers have been built using the function as the unit of compilation. In this framework, function boundaries often act as barriers to the formation of the most suitable scheduling regions. Function inlining may be used to circumvent this problem by assembling strongly coupled functions into the same compilation unit, but at the cost of very large function bodies. Consequently, global optimizations whose compile time and space requirements are superlinear in the size of the compilation unit, may be rendered prohibitively expensive. This paper introduces a new approach, called region-based compilation, wherein the compiler, after inlining, repartitions the program into more desirable compilation units, termed regions. Region-based compilation allows the compiler to control problem size and complexity while exposing inter-procedural scheduling, optimization and code motion opportunities.