Magnetic resonance spectroscopy (MRS) has been shown to have great clinical potential as a supplement to magnetic resonance imaging in the detection of prostate cancer (CaP). MRS provides functional information in the form of changes in the relative concentration of specific metabolites including choline, creatine, and citrate which can be used to identify potential areas of CaP. With a view to assisting radiologists in interpretation and analysis of MRS data, some researchers have begun to develop computer-aided detection (CAD) schemes for CaP identification from spectroscopy. Most of these schemes have been centered on identifying and integrating the area under metabolite peaks which is then used to compute relative metabolite ratios. However, manual identification of metabolite peaks on the MR spectra, and especially via CAD, is a challenging problem due to low signal-to-noise ratio, baseline irregularity, peak overlap, and peak distortion. In this article the authors present a novel CAD scheme that integrates nonlinear dimensionality reduction (NLDR) with an unsupervised hierarchical clustering algorithm to automatically identify suspicious regions on the prostate using MRS and hence avoids the need to explicitly identify metabolite peaks. The methodology comprises two stages. In stage 1, a hierarchical spectral clustering algorithm is used to distinguish between extracapsular and prostatic spectra in order to localize the region of interest (ROI) corresponding to the prostate. Once the prostate ROI is localized, in stage 2, a NLDR scheme, in conjunction with a replicated clustering algorithm, is used to automatically discriminate between three classes of spectra (normal appearing, suspicious appearing, and indeterminate). The methodology was quantitatively and qualitatively evaluated on a total of 18 1.5 T in vivo prostate T2-weighted (w) and MRS studies obtained from the multisite, multi-institutional American College of Radiology (ACRIN) trial. In the absence of the precise ground truth for CaP extent on the MR imaging for most of the ACRIN studies, probabilistic quantitative metrics were defined based on partial knowledge on the quadrant location and size of the tumor. The scheme, when evaluated against this partial ground truth, was found to have a CaP detection sensitivity of 89.33% and specificity of 79.79%. The results obtained from randomized threefold and fivefold cross validation suggest that the NLDR based clustering scheme has a higher CaP detection accuracy compared to such commonly used MRS analysis schemes as z score and PCA. In addition, the scheme was found to be robust to changes in system parameters. For 6 of the 18 studies an expert radiologist laboriously labeled each of the individual spectra according to a five point scale, with 1/2 representing spectra that the expert considered normal and 3/4/5 being spectra the expert deemed suspicious. When evaluated on these expert annotated datasets, the CAD system yielded an average sensitivity (cluster corresponding to suspicious spectra being identified as the CaP class) and specificity of 81.39% and 64.71%, respectively.