This disclosure relates to system and method for dynamically creating and building a domain dictionary. In one embodiment, the method comprises computing a syntactic similarity score, a usage similarity score, and a contextual similarity score for an input word with respect to each of a plurality of domain specific words in each of a plurality of existing domains. The method further comprises computing a weighted overall similarity score for the input word with respect to each of the plurality of domain specific words in each of the plurality of existing domains based on the syntactic similarity score, the usage similarity score, and the contextual similarity score. The method further comprises determining belongingness of the input word to each of the plurality of existing domains based on the weighted overall similarity score.