We study numerically and analytically a model of self-propelled polar disks on a substrate in two dimensions. The particles interact via isotropic repulsive forces and are subject to rotational noise, but there is no aligning interaction. As a result, the system does not exhibit an ordered state. The isotropic fluid phase separates well below close packing and exhibits the large number fluctuations and clustering found ubiquitously in active systems. Our work shows that this behavior is a generic property of systems that are driven out of equilibrium locally, as for instance by self-propulsion.