This paper presents a Finite State Machine (FSM) implementation method based on symbolic functional decomposition. This novel approach to multilevel logic synthesis of FSMs targets Field Programmable Gate Array (FPGA) architectures. Traditional methods consist of two steps: internal state encoding and then mapping the encoded state transition table into target architecture. In the case of FPGAs, functional decomposition is recognized as the most efficient method of implementing digital circuits. However, none of the known state encoding algorithms can be considered as a good method to be used with functional decomposition. In this paper, the concept of symbolic functional decomposition is applied to obtain a multilevel structure that is suitable for implementation in FPGA architectures. The symbolic functional decomposition does not require a separate encoding step. It accepts FSM description with symbolic states and performs decomposition, producing such a state encoding that guarantees the optimal or near-optimal solution.