A new efficient waveform relaxation technique based on dynamically overlapped partitioning scheme is presented. This overlapped partitioning method enables the application of waveform relaxation technique to bipolar VLSI circuits. Instead of fixed overlapping, we select the depth of overlapping dynamically based on the sensitivity criteria. By minimizing the overlapped area, we could reduce the additional computational overhead which results from overlapping the partitions. This overlapped waveform relaxation method has better convergence properties due to smaller error introduced at each step compared with standard relaxation techniques. When overlapped partitioning is used in the case of digital circuits, the waveforms obtained after first iteration are nearly accurate. Therefore, by using these waveforms as initial guess waveforms for the second iterations we can reduce Newton-Raphson iterations at each time point.