This paper formalizes the problem of a concurrent design of a modular product architecture and a cellular manufacturing layout and presents a way to deal with this design problem. First, the different types of a modular product architecture are explained as well as important implications of modularity for the manufacturing process. Several advantages of a modular product architecture refer to the manufacturing process of the product. Second, it is shown that the extent in which assembly tasks are performed in the cells strongly determines the advantages of a cellular manufacturing layout. These two facts ask for a simultaneous consideration of modular product design and the design of the manufacturing layout (i.e., manufacturing cells in which parts are manufactured and modules are assembled). The relation between product design and manufacturing process is described in this paper by means of four relation matrices: a module-module matrix, a module- machine matrix, a machine-part matrix, and a part-part matrix. On the basis of this description, a systematic approach is developed to support the concurrent design of modules and manufacturing cells. The experiences of two firms are included in the paper and illustrate the advantages of including assembly activities in manufacturing cells.