ABSTRACT In the context of hyperspectral image (HSI) analysis, a widely used feature extraction method, Principal Components Analysis (PCA) suffers from limitations such as wavelength bias and a lack of consideration for local spectral information. While various segmentation based PCA methods attempt to address these issues by incorporating local relationships, they still overlook band similarity beyond immediate neighbours. To address these challenges, this paper introduces a novel approach called dependency based segmented PCA (dPCA). This method employs hierarchical clustering-driven mutual information-based segmentation, facilitating more comprehensive feature extraction from HSI data. By utilizing this dependency-based segmentation, both global and local structures are effectively captured, providing enhanced details for classification tasks. The proposed dPCA is evaluated on four prominent HSI datasets in remote sensing for land use classification, and the experimental results underscore its superiority over conventional PCA, and other segmentation based PCA methods in terms of classification performance.