A new algorithm is presented to improve the efficiency of the computation of exchange-correlation contributions, a major time-consuming step in a density functional theory (DFT) calculation. The new method, called multiresolution exchange correlation (mrXC), takes advantage of the variation in resolution among the Gaussian basis functions and shifts the calculation associated with low-resolution (smooth) basis function pairs to an even-spaced cubic grid. The cubic grid is much less dense in the vicinity of the nuclei than the atom-centered grid and the computation on the former is shown to be much more efficient than on the latter. MrXC does not alter the formalism of the current standard algorithm based on the atom-centered grid (ACG), but instead employs two fast and accurate transformations between the ACG and the cubic grid. Preliminary results with local density approximation have shown that mrXC yields three to five times improvement in efficiency with negligible error. The extension to DFT functionals with generalized gradient approximation is also briefly discussed.