Abstract-Checking the functional equivalence of sequential circuits is an important practical problem. Because general algorithms for solving this problem require a state-space traversal of the product machine, they are computationally expensive. In this paper, we present a new method for sequential equivalence checking which utilizes functionally equivalent signals to prove the equivalence of both circuits, thereby avoiding the statespace traversal. The effectiveness of the proposed method is confirmed by experimental results on retimed and optimized ISCAS'89 benchmarks.