Clustering of related haplotypes in haplotype-based association mapping has the potential to improve power by reducing the degrees of freedom without sacrificing important information about the underlying genetic structure. We have modified a generalized linear model approach for association analysis by incorporating a density-based clustering algorithm to reduce the number of coefficients in the model. Using the GAW 15 Problem 3 simulated data, we show that our novel method can substantially enhance power to detect association with the binary rheumatoid arthritis (RA) phenotype at the HLA-DRB1 locus on chromosome 6. In contrast, clustering did not appreciably improve performance at locus D, perhaps a consequence of a rare susceptibility allele and of the overwhelming effect of HLA-DRB1/locus C, 5 cM distal. Optimization of parameters governing the clustering algorithm identified a set of parameters that delivered nearly ideal performance in a variety of situations. The cluster-based score test was valid over a wide range of haplotype diversity, and was robust to severe departures from Hardy-Weinberg equilibrium encountered near HLA-DRB1 in RA case-control samples.