We describe a new method (HOP) for identifying groups of particles in N-body simulations. Having assigned to every particle an estimate of its local density, we associate each particle with the densest of the Nh particles nearest to it. Repeating this process allows us to trace a path, within the particle set itself, from each particle in the direction of increasing density. The path ends when it reaches a particle that is its own densest neighbor; all particles reaching the same such particle are identified as a group. Combined with an adaptive smoothing kernel for finding the densities, this method is spatially adaptive, coordinate-free, and numerically straight-forward. One can proceed to process the output by truncating groups at a particular density contour and combining groups that share a (possibly different) density contour. While the resulting algorithm has several user-chosen parameters, we show that the results are insensitive to most of these, the exception being the outer density cutoff of the groups.