Cadherin cell-cell adhesion molecules form membrane-spanning molecular complexes that couple homophilic binding by the cadherin ectodomain to the actin cytoskeleton. A fundamental issue in cadherin biology is how this complex converts the weak intrinsic binding activity of the ectodomain into strong adhesion. Recently we demonstrated that cellular cadherins cluster in a ligand-dependent fashion when cells attached to substrata coated with the adhesive ectodomain of Xenopus C-cadherin (CEC1-5). Moreover, forced clustering of the ectodomain alone significantly strengthened adhesiveness (Yap, A.S., W.M. Brieher, M. Pruschy, and B.M. Gumbiner. Curr. Biol. 7:308-315). In this study we sought to identify the determinants of the cadherin cytoplasmic tail responsible for clustering activity. A deletion mutant of C-cadherin (CT669) that retained the juxtamembrane 94-amino acid region of the cytoplasmic tail, but not the beta-catenin-binding domain, clustered upon attachment to substrata coated with CEC1-5. Like wild-type C-cadherin, this clustering was ligand dependent. In contrast, mutant molecules lacking either the complete cytoplasmic tail or just the juxtamembrane region did not cluster. The juxtamembrane region was itself sufficient to induce clustering when fused to a heterologous membrane-anchored protein, albeit in a ligand-independent fashion. The CT669 cadherin mutant also displayed significant adhesive activity when tested in laminar flow detachment assays and aggregation assays. Purification of proteins binding to the juxtamembrane region revealed that the major associated protein is p120(ctn). These findings identify the juxtamembrane region of the cadherin cytoplasmic tail as a functionally active region supporting cadherin clustering and adhesive strength and raise the possibility that p120(ctn) is involved in clustering and cell adhesion.