A single neuron with Hebbian-type learning for the connection weights, and with nonlinear internal feedback, has been shown to extract the statistical principal components of its stationary input pattern sequence. A generalization of this model to a layer of neuron units is given, called the Subspace Network, which yields a multi-dimensional, principal component subspace. This can be used as an associative memory for the input vectors or as a module in nonsupervised learning of data clusters in the input space. It is also able to realize a powerful pattern classifier based on projections on class subspaces. Some classification results for natural textures are given.