The paper describes an approach for data representation and processing in the so called HOSVD-DCT based domain which combines the higher order singular value decomposition (HOSVD) with the discrete cosine transformation (DCT). The key idea is to express the multivariate function by an orthonormal set of one variable specific functions and perform DCT on those components which are less significant from the application point of view in order to ensure finer grained processing. It is advantageous also in case of system identification, where the behaviour of the system can be approximated by blending locally identified models. In this case the proposed method can efficiently be applied. © 2013 IEEE.