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This paper presents a novel approach to building a WLAN-based location fingerprinting system. Our algorithm intelligently transforms received signal strength (RSS) into principal components (PCs) such that the information of all access points (APs) is more efficiently utilized. Instead of selecting APs, the proposed technique replaces the elements with a subset of PCs to simultaneously improve the accuracy and reduce the online computation. Our experiments are conducted in a realistic WLAN environment. The results show that the mean error is reduced by 33.75 percent, and the complexity by 40 percent, as compared to the existing methods. Moreover, several benefits of our algorithm are demonstrated, such as requiring fewer training samples and enhancing the robustness to RSS anomalies.