Dataset distillation methods aim to compress a large dataset into a small set of synthetic samples, such that when being trained on, competitive performances can be achieved compared to regular training on the entire dataset. Among recently proposed methods, Matching Training Trajectories (MTT) achieves state-of-the-art performance on CIFAR-10/100, while having difficulty scaling to ImageNet-1k dataset due to the large memory requirement when performing unrolled gradient computation through back-propagation. Surprisingly, we show that there exists a procedure to exactly calculate the gradient of the trajectory matching loss with constant GPU memory requirement (irrelevant to the number of unrolled steps). With this finding, the proposed memory-efficient trajectory matching method can easily scale to ImageNet-1K with 6x memory reduction while introducing only around 2% runtime overhead than original MTT. Further, we find that assigning soft labels for synthetic images is crucial for the performance when scaling to larger number of categories (e.g., 1,000) and propose a novel soft label version of trajectory matching that facilities better aligning of model training trajectories on large datasets. The proposed algorithm not only surpasses previous SOTA on ImageNet-1K under extremely low IPCs (Images Per Class), but also for the first time enables us to scale up to 50 IPCs on ImageNet-1K. Our method (TESLA) achieves 27.9% testing accuracy, a remarkable +18.2% margin over prior arts.