This paper deals with on-line scheduling in a multi-cell flexible manufacturing system, operating in a produce-to-order environment. A two level distributed production control system (DPCS) is developed and tested through a simulation study. The DPCS allows autonomous and simultaneous operation of each cell-controller, utilizing only local and short term information as well as simple heuristic rules. Simulation experiments show that the proposed DPCS achieves good results in throughput, tardiness of orders and WIP inventory level and that it is robust to machine and handling device failures.