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A novel fuzzy decision tree is proposed in this paper (the FDT-support vector machine (SVM) classifier), where the node discriminations are implemented via binary SVMs. The tree structure is determined via a class grouping algorithm, which forms the groups of classes to be separated at each internal node, based on the degree of fuzzy confusion between the classes. In addition, effective feature selection is incorporated within the tree building process, selecting suitable feature subsets required for the node discriminations individually. FDT-SVM exhibits a number of attractive merits such as enhanced classification accuracy, interpretable hierarchy, and low model complexity. Furthermore, it provides hierarchical image segmentation and has reasonably low computational and data storage demands. Our approach is tested on two different tasks: natural forest classification using a QuickBird multispectral image and urban classification using hyperspectral data. Exhaustive experimental investigation demonstrates that FDT-SVM is favorably compared with six existing methods, including traditional multiclass SVMs and SVM-based binary hierarchical trees. Comparative analysis is carried out in terms of testing rates, architecture complexity, and computational times required for the operative phase.