This paper presents a new algorithm for the flexible manufacturing system (FMS) scheduling problem. The proposed algorithm is a heuristic based on filtered beam search. It considers finite buffer capacity, routing and sequence flexibilities and generates machine and automated guided vehicle (AGV) schedules for a given scheduling period. A new deadlock resolution mechanism is also developed as an integral part of the proposed algorithm. The performance of the algorithm is compared with several machine and AGV dispatching rules using mean flow time, mean tardiness and makespan criteria. It is also used to examine the effects of scheduling factors (i.e., machine and AGV load levels, routing and sequence flexibilities, etc.) on the system performance. The results indicate that the proposed scheduling algorithm yields considerable improvements in system performance over dispatching rules under a wide variety of experimental conditions.