In recent years, the advent of high-throughput assays, coupled with their diminishing cost, has facilitated a systems approach to biology. As a consequence, massive amounts of data are currently being generated, requiring efficient methodology aimed at the reduction of scale. Whole-genome transcriptional profiling is a standard component of systems-level analyses, and to reduce scale and improve inference clustering genes is common. Since clustering is often the first step toward generating hypotheses, cluster quality is critical. Conversely, because the validation of cluster-driven hypotheses is indirect, it is critical that quality clusters not be obtained by subjective means. In this paper, we present a new objective-based clustering method and demonstrate that it yields high-quality results. Our method, modulated modularity clustering (MMC), seeks community structure in graphical data. MMC modulates the connection strengths of edges in a weighted graph to maximize an objective function (called modularity) that quantifies community structure. The result of this maximization is a clustering through which tightly-connected groups of vertices emerge. Our application is to systems genetics, and we quantitatively compare MMC both to the hierarchical clustering method most commonly employed and to three popular spectral clustering approaches. We further validate MMC through analyses of human and Drosophila melanogaster expression data, demonstrating that the clusters we obtain are biologically meaningful. We show MMC to be effective and suitable to applications of large scale. In light of these features, we advocate MMC as a standard tool for exploration and hypothesis generation.