The problem of the formation of machine-part cells in FMS is a very important issue at the planning and operating stages of FMS. This problem is inherently a combinatorial optimization problem, proven to be NP-complete(or, NP-hard). Among the several kinds of approaches which have been applied to solve the combinatorial optimization problems, the Simulated Annealing(SA) algorithm, a technique of random search type with a flexibility in generating alternatives, is a powerful problem solving tool. In this paper, the SA algorithm is used to solve machine cell-part family formation problems. The primary purpose of the study is to find the near-optimal solution of machine cell-part family formation problem, whare the product volume and number of operations are prespecified, that can minimize the total material handling cost caused by exceptional elements and intercell moves as much as possible. The results show that the SA algorithm is able to find a near-optimal solution for practical problems of the machine cell-part family formation.