A new model-order reduction technique for linear dynamic systems is presented. The idea behind this technique is to transform the dynamic system function from the s-domain into the z-domain via the bilinear transformation, then use Prony?s [1] least-squares approximation method instead of the commonly employed Padé approximation method, and finally transform the reduced system back into the s-domain using the inverse bilinear transformation. Simulation results for large practical systems show that this technique based on Prony?s method gives much higher accuracy than the traditional Padé method, and results in lower-order approximations without significant increase in simulation time.