A new tree-structured neural network classifier is proposed for the automatic real-time inspection of cold-rolled steel strip surface defects. The defects are classified into 3 groups such as area type, disk type, area & line type in the first stage of the tree-structured neural network. The defects are classified in more detail into 11 major defect types which are considered as serious defects in the second stage of neural network. The tree-structured neural network classifier consists of 4 different neural networks and optimum features are selected for each neural network classifier by using SFFS algorithm and correlation test. The developed classifier demonstrates very plausible result which is compatible with commercial products having high world-wide market shares.