Path compression is an optimization technique used in data structures, particularly in the context of the Union-Find algorithm. It helps to flatten the structure of the tree whenever a find operation is performed, making future queries faster. When searching for the root of a set, path compression updates the parent pointers of nodes along the way to point directly to the root. This technique significantly reduces the time complexity of subsequent operations. By minimizing the height of the trees formed during union operations, path compression ensures that the Union-Find structure remains efficient, allowing for nearly constant time complexity for both union and find operations.