With the growing demand on cluster analysis for categorical data, a handful of categorical clustering algorithms have been developed. Surprisingly, to our knowledge, none has satisfactorily addressed the important problem for categorical clustering – how can we determine the best K number of clusters for a categorical dataset? Since the categorical data does not have the inherent distance function as the similarity measure, the traditional cluster validation techniques based on the geometry shape and density distribution cannot be applied to answer this question. In this paper, we investigate the entropy property of the categorical data and propose a BkPlot method for determining a set of candidate “best Ks”. This method is implemented with a hierarchical clustering algorithm HierEntro. The experimental result shows that our approach can effectively identify the significant clustering structures. keywords Categorical Data Clustering, Entropy, Cluster Validation