Abstract Background: Classical cadherin-based cellular adhesion is mediated by a multicomponent protein complex that links the adhesive binding activity of the cadherin ectodomain to the actin cytoskeleton. Despite the importance of cadherins in morphogenesis and development, we know very little about how cells determine and alter cadherin adhesive strength. In this study, we sought to identify specific cellular mechanisms that modulate cadherin function by studying adhesion between cells transfected with Xenopus C-cadherin mutant molecules and substrata coated with the purified ectodomain of C-cadherin. Results: Using the FKBP–FK1012 protein oligomerization system, we found that forced clustering, in cells, of cadherin mutants lacking the cytoplasmic tail significantly increased cellular adhesive strength. Therefore, redistribution of the adhesive binding sites of cells into clusters can influence adhesion independently of other protein interactions mediated by the cadherin cytoplasmic tail. Furthermore, cells transfected with full-length C-cadherin demonstrated dynamic changes in adhesion over time that correlated with clustering but not with changes in the surface expression of C-cadherin or in the composition of the cadherin–catenin complex. The cytoplasmic tail was, however, necessary for clustering of wild-type cadherin. Conclusions: These studies directly demonstrate a fundamental role for lateral clustering in cadherin function. The distribution of cadherin binding sites presented at the cell surface, a cellular property which is regulated by the cadherin cytoplasmic tail, is an important mechanism which modulates cellular adhesion independently of cytoskeletal activity or signalling.