Existing data-stream clustering algorithms such as CluStream are based on k-means. These clustering algorithms are incompetent to find clusters of arbitrary shapes and cannot handle outliers. Further, they require the knowledge of k and user-specified time window. To address these issues, this paper proposes D-Stream, a framework for clustering stream data using a density-based approach. The algorithm uses an online component which maps each input data record into a grid and an offline component which computes the grid density and clusters the grids based on the density. The algorithm adopts a density decaying technique to capture the dynamic changes of a data stream. Exploiting the intricate relationships between the decay factor, data density and cluster structure, our algorithm can efficiently and effectively generate and adjust the clusters in real time. Further, a theoretically sound technique is developed to detect and remove sporadic grids mapped to by outliers in order to dram...