This paper presents a concurrent design approach that deals with manufacturing cell formation and cellular layout in Cellular Manufacturing System. Manufacturing cell formation is to group machines into machine cells dedicated to manufacture of part families, and cellular layout problem determines layout of the manufacturing cells within shop and layout of the machines within a cell. In this paper, a concurrent approach for design of machine cell and cellular layout is developed considering manufacturing parameters such as alternative process plans, alternative machines, production volume and processing time of part, and cost per unit time of operation. A mathematical model which minimizes total cost consisting of machine installation cost, machine operating cost, and intercell and intracell movements cost of part is proposed. A hybrid method based on genetic algorithm is proposed to solve the manufacturing cell formation and cellular layout design problem concurrently. The performance of the hybrid method is examined on several problems.