Abstract Identifying cell types is crucial for understanding the functional units of an organism. Machine learning has shown promising performance in identifying cell types, but many existing methods lack biological significance due to poor interpretability. However, it is of the utmost importance to understand what makes cells share the same function and form a specific cell type, motivating us to propose a biologically interpretable method. CellTICS prioritizes marker genes with cell-type-specific expression, using a hierarchy of biological pathways for neural network construction, and applying a multi-predictive-layer strategy to predict cell and sub-cell types. CellTICS usually outperforms existing methods in prediction accuracy. Moreover, CellTICS can reveal pathways that define a cell type or a cell type under specific physiological conditions, such as disease or aging. The nonlinear nature of neural networks enables us to identify many novel pathways. Interestingly, some of the pathways identified by CellTICS exhibit differential expression “variability” rather than differential expression across cell types, indicating that expression stochasticity within a pathway could be an important feature characteristic of a cell type. Overall, CellTICS provides a biologically interpretable method for identifying and characterizing cell types, shedding light on the underlying pathways that define cellular heterogeneity and its role in organismal function. CellTICS is available at https://github.com/qyyin0516/CellTICS.