Extraordinary power consumption during the scan test may inadvertently cause a functional good die to fail. This paper proposes a peak power reduction algorithm for the scan test which considers both the shift cycles and capture cycles simultaneously to limit the peak power of all test cycles during the test generation. In addition, the analysis also recommends the types of circuit structures that are more suitable to add test logic for maximum power reduction with the minimum test cost. The proposed methodology is highly efficient and can be applied to large industrial designs.