An artificial neural network (ANN) and affinity propagation (AP) algorithm based user categorization technique is presented. The proposed algorithm is designed for closed access femtocell network. ANN is used for user classification process and AP algorithm is used to optimize the ANN training process. AP selects the best possible training samples for faster ANN training cycle. The users are distinguished by using the difference of received signal strength in a multielement femtocell device. A previously developed directive microstrip antenna is used to configure the femtocell device. Simulation results show that, for a particular house pattern, the categorization technique without AP algorithm takes 5 indoor users and 10 outdoor users to attain an error-free operation. While integrating AP algorithm with ANN, the system takes 60% less training samples reducing the training time up to 50%. This procedure makes the femtocell more effective for closed access operation.