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Effective resistance to intellectual property (IP) piracy, overproduction and reverse engineering are becoming more and more necessary in the integrated circuit (IC) supply chain. To protect the hardware, the obfuscation methodology hides the original function by adding a large number of redundant states. However, existing hardware obfuscation approaches have hardware overhead and efficiency of obfuscation limitations. This paper proposed a novel methodology for IP security using the minimum spanning tree finite state machine (MST-FSM) obfuscation. In the minimum spanning tree (MST) algorithm, the Hamming distance defines the cost of obfuscated states. The Kruskal algorithm optimizes the connection relationship of obfuscated states by computing the Hamming distance of the MST-FSM. The proposed MST-FSM is automatically generated and embedded in the hardware IP with the self-building program. Finally, the MST-FSM is applied on the itc99 benchmark circuits and encryption standard IP cores. Compared with other state-of-the-arts, the obfuscation potency is improved by 3.57%, and the average hardware cost is decreased by about 6.01%. [ABSTRACT FROM AUTHOR]