We report an observation of substantial deviations in the photoelectron angular distribution for photoionization of atoms in free Xe clusters compared to the case of photoionization of free atoms. The cross section, however, seems not to vary between the cluster and free atoms. This observation was made in the vicinity of the Xe 4d Cooper minimum, where the atomic angular distribution is known to vary dramatically. The angular distribution of electrons emitted from atoms in the clusters is more isotropic than that of free atoms over the entire kinetic energy range studied. Furthermore, the angular distribution is more isotropic for atoms in the interior of the clusters than for atoms at the surface. We attribute this deviation to elastic scattering of the outgoing photoelectrons. We have investigated two average cluster sizes, (N) approximate to 4000 and 1000 and found no significant differences between these two cases.