Large language models have steadily increased in size to achieve improved performance; however, this growth has also led to greater inference time and computational demands. Consequently, there is rising interest in model size reduction methods. To address this issue, we propose Projected Compression, a novel model compression technique, that reduces model weights by utilizing projection modules. Specifically, we first train additional trainable projections weights and preserve access to all the original model parameters. Subsequently, these projections are merged into a lower-dimensional product matrix, resulting in a reduced-size standard Transformer-based model. Unlike alternative approaches that require additional computational overhead, our method matches the base model's per-token computation step in FLOPs. Experimental results show that Projected Compression outperforms the comparable hard pruning and retraining approach on higher quality models. Moreover, the performance margin scales well with the number of tokens.