Hierarchical compression includes the contemporaneous implementation of link-layer and higher-layer compression on data flowing over a link. Hierarchical compression can be achieved by configuring network nodes positioned at the link-layer to recognize higher-layer compression symbols embedded in incoming data streams, and to adapt link-layer compression to compensate for those higher-layer compression symbols. One technique for adapting link-layer compression is to perform data chunking in-between higher-layer compression symbols. This may reduce the likelihood that higher-layer compression symbols will interfere with the network nodes ability to identify redundant data chunks at the link-layer. Another technique for adapting link-layer compression is to define the HASH algorithm in such a way that the hash of a data string renders the same hash value as the hash of the higher layer compression symbol corresponding to the data string.