1. Navigate to your site’s Dashboard.
  2. Select Posts on the left side of the screen.
  3. Four links will now be displayed: Posts, Add New, Categories, and Post Tags. Select Categories.
  4. Name your category.
  5. Click Add Category.
    <img class="alignnone size-full wp-image-62187" height="113" width="448" title="new-category-3" alt="new-category-3" src="/tech/files/2011/02/new-category-3.jpg" /

You have now created a category for your posts.  By repeating these steps, you can create multiple categories.  When you create a new post, you can choose to assign it to a category.  This allows you to sort and view posts by a certain category, rather than searching through all posts.

>> Create a Post