In this paper, we present a novel spectral analysis algorithm for image clustering. First, the image manifold is embedded onto a low-dimensional feature space with dual objectives, i.e., maximizing the distances of faraway sample pairs meanwhile preserving the local manifold structure, which essentially results in a Trace Ratio optimization problem. Then an efficient iterative procedure is proposed to directly optimize the trace ratio and finally the clustering process is implemented on the derived low-dimensional embedding. Moreover, the linear approximation is also presented for handling the out-of-sample data. Experimental results show that our algorithm, referred to as Maximum Unfolded Embedding, brings an encouraging improvement in clustering accuracy over the state-of-the-art algorithms, such as K-Means, PCA-Kmeans, normalized cut , and Locality Preserving Clustering .