In this paper, the adaptive competitive learning (ACL) neural network algorithm is proposed. This neural network not only groups similar input feature vectors together but also determines the appropriate number of groups of these vectors. This algorithm uses a new proposed criterion referred to as the ACL criterion. This criterion evaluates different clustering structures produced by the ACL neural network for an input data set. Then, it selects the best clustering structure and the corresponding network architecture for this data set. The selected structure is composed of the minimum number of clusters that are compact and balanced in their sizes. The selected network architecture is efficient, in terms of its complexity, as it contains the minimum number of neurons. Synaptic weight vectors of these neurons represent well-separated, compact and balanced clusters in the input data set. The performance of the ACL algorithm is evaluated and compared with the performance of a recently proposed algorithm in the literature in clustering an input data set and determining its number of clusters. Results show that theACLalgorithm is more accurate and robust in both determining the number of clusters and allocating input feature vectors into these clusters than the other algorithm especially with data sets that are sparsely distributed.