You could use:
var lookup = dictionary.SelectMany(p => p.Value
.Select(x => new { p.Key, Value = x}))
.ToLookup(pair => pair.Key, pair => pair.Value);
(You could use KeyValuePair
instead of an anonymous type - I mostly didn't for formatting reasons.)
It's pretty ugly, but it would work. Can you replace whatever code created the dictionary to start with though? That would probably be cleaner.