Machine-part cell formation is the process of identifying part families and the appropriate machine cell for each part family. Grouping efficacy (GE), the widely used measure for assessing the goodness of the machine-part cells depends on identification of correct part families and the appropriate machine cell for each part family. In this paper, a heuristic based on correlation analysis and relevance index is proposed for the formation of machine-part cells. Computational performance of the proposed heuristic on a set of group technology data-set available in the literature is also presented. GE of the solutions produced by the proposed heuristic is equal to the best efficacy reported in the literature for 63% of the test instances and improved the GE for 6% of the total test instances. © 2014 Taylor & Francis.