Error-tolerance is an innovative concept that can significantly improve the yield of integrated circuits (IC's) by identifying defective yet acceptable chips. A systematic method to employ this concept, however, has not been addressed. In this paper, we propose a general methodology to systematically utilize error-tolerance for practical applications. The proposed methodology explores the error-tolerance features of target designs, evaluates the acceptability of defective chips, and predicts the yield improvement that can be achieved. To illustrate and validate the proposed methodology, we employ a discrete cosine transform (DCT) circuit that has been widely used in multimedia compression systems in a case study. By applying the proposed methodology to the DCT, an error-tolerant design flow is established. Proper attributes are determined for acceptability evaluation, and corresponding test methods are developed to identify acceptable chips. Experimental results show that one can easily specify various acceptability thresholds of the identified error-tolerable attributes to obtain different degrees of yield improvement, which validates the efficiency and effectiveness of the proposed methodology.