In this paper we propose a photonic crystal Mach-Zehnder interferometer (MZI) based on a new coupled-cavity waveguide, where its advantage over the previous type of photonic crystal coupled-cavity waveguide is discussed. A heterostructure Y-junction is comprised of square and hexagonal lattices of the new coupled-cavity waveguide. It is designed by applying the temporal coupled-mode theory and is optimized, where an overall throughput efficiency of more than 90% is achieved at the wavelength of 1.55μm. The design of the Y-junction is performed using finite-difference time-domain method. The designed heterostructure Y-junction is used in the structure of a MZI, where its arms are approximately as short as 24μm. Finally, the transient response of the proposed optical switch is investigated.