We present the novel microscopic n-body dynamical transport approach PHQMD (Parton-Hadron-Quantum-Molecular-Dynamics) for the description of particle production and cluster formation in heavy-ion reactions at relativistic energies. The PHQMD extends the established PHSD (Parton-Hadron-String-Dynamics) transport approach by replacing the mean-field by density dependent two body interactions in a similar way as in the Quantum Molecular Dynamics (QMD) models. This allows for the calculation of the time evolution of the n-body Wigner density and therefore for a dynamical description of cluster and hypernuclei formation. The clusters are identified with the MST (Minimum Spanning Tree) or the SACA (Simulated Annealing Cluster Algorithm) algorithm which -by regrouping the nucleons in single nucleons and noninteracting clusters -generates the most bound configuration of nucleons and clusters. Collisions among particles in PHQMD are treated in the same way as in PHSD. The PHQMD approach can be used in different modes for the hadron propagation: the mean-field based PHSD mode and the QMD mode based on different density dependent two-body potentials between the nucleons which correspond to the different equationsof-state (EoS). This allows to study the sensitivity of observables on the different descriptions of the potential interactions among nucleons. Here we present the first PHQMD results for general 'bulk' observables such as rapidity distributions and transverse mass spectra for hadrons (π, K,K, p,p, Λ,Λ) from SIS to RHIC energies, as well as for cluster production, including hypernuclei.