The large number of spectral channels in a hyperspectral image (HSI) produces a fine spectral resolution to differentiate between materials in a scene. However, difficult classes that have similar spectral signatures are often confused while merely exploiting information in the spectral domain. Therefore, in addition to spectral characteristics, the spatial relationships inherent in HSIs should also be considered for incorporation into classifiers. The growing availability of high spectral and spatial resolution of remote sensors provides rich information for image clustering. Besides the discriminating power in the rich spectrum, contextual information can be extracted from the spatial domain, such as the size and the shape of the structure to which one pixel belongs. In recent years, spectral clustering has gained popularity compared to other clustering methods due to the difficulty of accurate statistical modeling of data in high dimensional space. The joint spatial–spectral information could be effectively incorporated into the proximity graph for spectral clustering approach, which provides a better data representation by discovering the inherent lower dimensionality from the input space. We embedded both spectral and spatial information into our proposed local density adaptive affinity matrix, which is able to handle multiscale data by automatically selecting the scale of analysis for every pixel according to its neighborhood of the correlated pixels. Furthermore, we explored the “conductivity method,” which aims at amplifying the block diagonal structure of the affinity matrix to further improve the performance of spectral clustering on HSI datasets.