This is a AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF ENGINEERING report procured by the Pentagon and made available for public release. It has been reproduced in the best form available to the Pentagon. It is not spiral-bound, but rather assembled with Velobinding in a soft, white linen cover. The Storming Media report number is A151123. The abstract provided by the Pentagon follows: Cluster analysis is widely used in many applications, ranging from image and speech coding to pattern recognition. A new method that uses the weighted Mahalanobis distance (WMD) via the covariance matrix of the individual clusters as the basis for grouping is presented in this thesis. In this algorithm, the Mahalanobis distance is used as a measure of similarity between the samples in each cluster. This thesis discusses some difficulties associated with using the Mahalanobis distance in clustering. The proposed method provides solutions to these problems. The new algorithm is an approximation to the well- known expectation maximization (EM) procedure used to find the maximum likelihood estimates in a Gaussian mixture model. Unlike the EM procedure, WMD eliminates the requirement of having initial parameters such as the cluster means and variances as it starts from the raw data set. Properties of the new clustering method are presented by examining the clustering quality for codebooks designed with the proposed method and competing methods on a variety of data sets. The competing methods are the Linde-Buzo-Gray (LBG) algorithm and the Fuzzy c-means (FCM) algorithm, both of them use the Euclidean distance. The neural network for hyperellipsoidal clustering (HEC) that uses the Mahalnobis distance is also studied and compared to the WMD method and the other techniques as well. The new method provides better results than the competing methods. Thus, this method becomes another useful tool for use in clustering.