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When users seek for Network in a heterogeneous cellular network, physical cell identification (PCI) is used to distinguish different cellular cells. However, the number of PCIs is extremely limited. Moreover, they are unable to satisfy large-scale random deployment of small cellular cells as well as difficult to guarantee users' quality of service. Therefore, this paper presents a fuzzy hierarchical clustering-physical cell identification allocation scheme. The proposal is based on the “activity”of cellular base station (CBS) and uses the Euclidean distance method to obtain the degree of similarities between the CBSs. After dynamic fuzzy clustering, the optimal clustering results are obtained by using the analysis of variance. In this paper, high priority of allocating and reusing the PCIs are given to those CBSs with higher activity. Simulation results show a clear increase in PCI allocation efficiency and reduction in PCI-conflict and PCI-confusion possibilities when compared with the existing schemes.