Abstract In this paper, we build up a connection between intuitionistic fuzzy special set (IFSS) and intuitionistic fuzzy set (IFS). Firstly, by using the concept of IFSS, we present the concept of intuitionistic nested set (INS) and show that an IFS can be determined by an INS. Secondly, we introduce the concept of λ -cut sets of IFS and show that λ -cut sets of IFS have the same properties as the cut sets of Zadeh fuzzy set. Thirdly, by using the concepts of λ -cut set of IFS and INS, we build up the decomposition theorem, representation theorem and extension principle of IFS. Finally, we apply our theory to intuitionistic fuzzy algebra and obtain the concept of intuitionistic fuzzy subgroup.