Facebook iconWhat is Tokenization and How does it work? - F22 Labs
F22 logo
Blogs/AI

What is Tokenization and How does it work?

Written by Ajay Patel
Sep 29, 2025
4 Min Read
What is Tokenization and How does it work? Hero

Tokenization is a fundamental process in Natural Language Processing (NLP) and plays a crucial role in preparing text data for machine learning models. This blog post will break down what tokenization is, why it's important, and how it works with a concrete example.

What is Tokenization?

Tokenization is the process of splitting text into smaller, manageable pieces called tokens. These tokens can be words, subwords, characters, or other units depending on the tokenization strategy. The purpose of tokenization is to transform text into a format that can be effectively processed by machine learning algorithms.

Why is Tokenization Important?

Before any NLP model can analyze and understand text, it needs to be converted into a numerical format. Tokenization is the first step in this conversion process. By breaking down text into tokens, we enable models to handle, learn from, and make predictions based on textual data.

How Tokenization Works

Let’s dive into a practical example to understand tokenization better. Consider the sentence:

"f22 Labs: A software studio based out of Chennai. We are the rocket fuel for other startups across the world, powering them with extremely high-quality software. We help entrepreneurs build their vision into beautiful software products."

Here’s a step-by-step breakdown of how tokenization works:

Step 1: Splitting the Sentence into Tokens

The first step in tokenization is breaking the sentence into smaller units. Depending on the tokenizer used, these tokens can be:

Understanding Tokenization in LLMs
Learn how text becomes tokens, how tokenizers impact cost and context length, and how to choose the right tokenizer for your model.
Murtuza Kutub
Murtuza Kutub
Co-Founder, F22 Labs

Walk away with actionable insights on AI adoption.

Limited seats available!

Calendar
Saturday, 28 Feb 2026
10PM IST (60 mins)

Words: ["f22", "Labs", ":", "A", "software", "studio", "based", "out", "of", "Chennai", ".", "We", "are", "the", "rocket", "fuel", "for", "other", "startups", "across", "the", "world", ",", "powering", "them", "with", "extremely", "high-quality", "software", ".", "We", "help", "entrepreneurs", "build", "their", "vision", "into", "beautiful", "software", "products", "."]

Subwords: the tokens might be more granular. For example, ["f22", "Lab", "s", ":", "A", "software", "studio", "based", "out", "of", "Chennai", ".", "We", "are", "the", "rock", "et", "fuel", "for", "other", "start", "ups", "across", "the", "world", ",", "power", "ing", "them", "with", "extremely", "high", "-", "quality", "software", ".", "We", "help", "entrepreneur", "s", "build", "their", "vision", "into", "beautiful", "software", "products", "."]

Characters: For character-level tokenization, the sentence would be split into individual characters: ["f", "2", "2", " ", "L", "a", "b", "s", ":", " ", "A", " ", "s", "o", "f", "t", "w", "a", "r", "e", " ", "s", "t", "u", "d", "i", "o", " ", "b", "a", "s", "e", "d", " ", "o", "u", "t", " ", "o", "f", " ", "C", "h", "e", "n", "n", "a", "i", ".", " ", "W", "e", " ", "a", "r", "e", " ", "t", "h", "e", " ", "r", "o", "c", "k", "e", "t", " ", "f", "u", "e", "l", " ", "f", "o", "r", " ", "o", "t", "h", "e", "r", " ", "s", "t", "a", "r", "t", "u", "p", "s", " ", "a", "c", "r", "o", "s", "s", " ", "t", "h", "e", " ", "w", "o", "r", "l", "d", ",", " ", "p", "o", "w", "e", "r", "i", "n", "g", " ", "t", "h", "e", "m", " ", "w", "i", "t", "h", " ", "e", "x", "t", "r", "e", "m", "e", "l", "y", " ", "h", "i", "g", "h", "-", "q", "u", "a", "l", "i", "t", "y", " ", "s", "o", "f", "t", "w", "a", "r", "e", ".", " ", "W", "e", " ", "h", "e", "l", "p", " ", "e", "n", "t", "r", "e", "p", "r", "e", "n", "e", "u", "r", "s", " ", "b", "u", "i", "l", "d", " ", "t", "h", "e", "i", "r", " ", "v", "i", "s", "i", "o", "n", " ", "i", "n", "t", "o", " ", "b", "e", "a", "u", "t", "i", "f", "u", "l", " ", "s", "o", "f", "t", "w", "a", "r", "e", " ", "p", "r", "o", "d", "u", "c", "t", "s", "."]

Step 2: Mapping Tokens to Numerical IDs

Once the sentence is tokenized, each token is mapped to a unique numerical ID using a vocabulary. The vocabulary is a predefined mapping that associates each token with a specific ID. For example:

Vocabulary:

{"f22": 1501, "Labs": 1022, ":": 3, "A": 4, "software": 2301, "studio": 2302, "based": 2303, "out": 2304, "of": 2305, "Chennai": 2306, ".": 5, "We": 6, "are": 7, "the": 8, "rocket": 2307, "fuel": 2308, "for": 2309, "other": 2310, "startups": 2311, "across": 2312, "world": 2313, ",": 9, "powering": 2314, "them": 2315, "with": 2316, "extremely": 2317, "high-quality": 2318, "products": 2319, "entrepreneurs": 2320, "build": 2321, "their": 2322, "vision": 2323, "into": 2324, "beautiful": 2325}

Token IDs:

[1501, 1022, 3, 4, 2301, 2302, 2303, 2304, 2305, 2306, 5, 6, 7, 8, 2307, 2308, 2309, 2310, 2311, 2312, 2313, 9, 2314, 2315, 2316, 2317, 2318, 2301, 5, 6, 2320, 2321, 2322, 2323, 2324, 2325]

So the original sentence is represented as the sequence of token IDs.

Real-World Tokenization

To analyze the tokens and token IDs for your example sentence using OpenAI's tokenizer, you can follow these steps:

1. Visit the Tokenizer Tool: Go to OpenAI's Tokenizer to access the tool.

Understanding Tokenization in LLMs
Learn how text becomes tokens, how tokenizers impact cost and context length, and how to choose the right tokenizer for your model.
Murtuza Kutub
Murtuza Kutub
Co-Founder, F22 Labs

Walk away with actionable insights on AI adoption.

Limited seats available!

Calendar
Saturday, 28 Feb 2026
10PM IST (60 mins)

2. Input Your Sentence: Enter your example sentence in the text box. 

View Tokens and IDs: The tool will display the tokens and their corresponding token IDs. Each word or subword will be split into tokens as per the GPT tokenizer's rules, and you can see how the sentence breaks down.

Analyze the tokens and token IDs using ChatGPT

Token IDs

Token IDs

Suggested Reads- What is a Large Language Model (LLM)

Conclusion

Tokenization is the crucial first step in transforming raw text into a format that machine learning models can understand. By breaking down sentences into tokens and converting them to numerical IDs, we prepare text data for further processing and analysis. Understanding how tokenization works is essential for anyone working with NLP tasks and models.

Author-Ajay Patel
Ajay Patel

Hi, I am an AI engineer with 3.5 years of experience passionate about building intelligent systems that solve real-world problems through cutting-edge technology and innovative solutions.

Share this article

Phone

Next for you

DSPy vs Normal Prompting: A Practical Comparison Cover

AI

Feb 23, 202618 min read

DSPy vs Normal Prompting: A Practical Comparison

When you build an AI agent that books flights, calls tools, or handles multi-step workflows, one question comes up quickly: how should you control the model? Most developers use prompt engineering. You write detailed instructions, add examples, adjust wording, and test until it works. Sometimes it works well. Sometimes changing a single sentence breaks the entire workflow. DSPy offers a different approach. Instead of manually crafting prompts, you define what the system should do, and the fram

How to Calculate GPU Requirements for LLM Inference? Cover

AI

Feb 23, 20269 min read

How to Calculate GPU Requirements for LLM Inference?

If you’ve ever tried running a large language model on a CPU, you already know the pain. It works, but the latency feels unbearable. This usually leads to the obvious question:          “If my CPU can run the model, why do I even need a GPU?” The short answer is performance. The long answer is what this blog is about. Understanding GPU requirements for LLM inference is not about memorizing hardware specs. It’s about understanding where memory goes, what limits throughput, and how model choice

Map Reduce for Large Document Summarization with LLMs Cover

AI

Feb 23, 20268 min read

Map Reduce for Large Document Summarization with LLMs

LLMs are exceptionally good at understanding and generating text, but they struggle when documents grow large. Movies script, policy PDFs, books, and research papers quickly exceed a model’s context window, resulting in incomplete summaries, missing sections, or higher latency. When it’s tempting to assume that increasing context length solves this problem, real-world usage shows hits different. Larger contexts increase cost, latency, and instability, and still do not guarantee full coverage.