Cluster formation of E‐cadherin on the cell surface is believed to be of major importance for cell‐cell adhesion. To mimic this process the extracellular part of mouse E‐cadherin (ECAD) was recombinantly fused to the assembly domain of rat cartilage oligomeric matrix protein (COMP), resulting in the chimeric protein ECAD‐COMP. The COMP domain formed a five‐stranded alpha‐helical coiled‐coil. This enabled the formation of a pentameric ECAD with bundled C‐termini and free N‐termini. The pentameric protein construct ECAD‐COMP and the monomeric ECAD were expressed in human embryonal kidney 293 cells. Electron microscopy, analytical ultracentrifugation, solid phase binding and cell attachment assays revealed that pentamers showed strong self‐association and cell attachment, whereas monomers exhibited no activity. At the high internal concentration in the pentamer the N‐terminal EC1 domains of two E‐cadherin arms interact to form a ring‐like structure. Then the paired domains interact with a corresponding pair from another pentamer. None of the four other extracellular domains of E‐cadherin is involved in this interaction. Based on these results, an in vivo mechanism is proposed whereby two N‐terminal domains of neighbouring E‐cadherins at the cell surface first form a pair, which binds with high affinity to a similar complex on another cell. The strong dependence of homophilic interactions on C‐terminal clustering points towards a regulation of E‐cadherin mediated cell‐cell adhesion via lateral association.