An iterative homogenization method using transport theory in a one-dimensional cylindrical cell model has been developed to improve the homogenized cross sections for strongly heterogeneous zones in research reactors. The flux-weighting homogenized cross sections are modified by a correction factor, the cell flux ratio under an albedo boundary condition. The albedo at the cell boundary is iteratively determined to reflect the geometry effects of the material properties of the adjacent cells. This method has been tested with a simplified core model of the Korea Multipurpose Research Reactor. The results demonstrate that the reaction rates of an off-center control shroud cell, the multiplication factor, and the power distribution of the reactor core are close to those of the fine-mesh heterogeneous transport model.