We propose a novel distributed algorithm to cluster graphs. The algorithm recovers the solution obtained from spectral clustering without the need for expensive eigenvalue/vector computations. We prove that, by propagating waves through the graph, a local fast Fourier transform yields the local component of every eigenvector of the Laplacian matrix, thus providing clustering information. For large graphs, the proposed algorithm is orders of magnitude faster than random walk based approaches. We prove the equivalence of the proposed algorithm to spectral clustering and derive convergence rates. We demonstrate the benefit of using this decentralized clustering algorithm for community detection in social graphs, accelerating distributed estimation in sensor networks and efficient computation of distributed multi-agent search strategies.