We present a simple and scalable algorithm for clustering tens of millions of phrases and use the resulting clusters as features in discriminative classifiers. To demonstrate the power and generality of this approach, we apply the method in two very different applications: named entity recognition and query classification. Our results show that phrase clusters offer significant improvements over word clusters. Our NER system achieves the best current result on the widely used CoNLL benchmark. Our query classifier is on par with the best system in KDDCUP 2005 without resorting to labor intensive knowledge engineering efforts.