In this paper, we present a new approach to the problem of local logic transformation for reduction of power dissipation in logic circuits. Based on the finite-state input transition (FIT) power dissipation model, we introduce a cost function which accounts for the effects of input capacitance, input slew rate, internal parasitic capacitance of logic gates, interconnect capacitance, as well as switching power. Our approach provides an efficient way of estimating the global effect of local logic transformations in logic circuits. In our approach, the FIT model for the transitive fanout cells of a locally transformed subcircuit can be reused to measure the global power dissipation by varying the input probabilities of the transitive fanout cells. Local logic transformation is carried out based on compatible sets of permissible functions (CSPF). Experimental results show that local logic transformation based on CSPF using our cost function can reduce power consumption by about 36% on average without increase in the worst-case circuit delay.