Abstract Background Spatial variation in patterns of disease outcomes is often explored with techniques such as cluster detection analysis. In other types of investigations, geographically varying individual or community level characteristics are often used as independent predictors in statistical models which also attempt to explain variation in disease outcomes. However, there is a lack of research which combines geographically referenced exploratory analysis with multilevel models. We used a spatial scan statistic approach, in combination with predicted block group-level disease patterns from multilevel models, to examine geographic variation in prostate cancer grade and stage at diagnosis. Results We examined data from 20928 Maryland men with incident prostate cancer reported to the Maryland Cancer Registry during 1992–1997. Initial cluster detection analyses, prior to adjustment, indicated that there were four statistically significant clusters of high and low rates of each outcome (later stage at diagnosis and higher histologic grade of tumor) for prostate cancer cases in Maryland during 1992–1997. After adjustment for individual case attributes, including age, race, year of diagnosis, patterns of clusters changed for both outcomes. Additional adjustment for Census block group and county-level socioeconomic measures changed the cluster patterns further. Conclusions These findings provide evidence that, in locations where adjustment changed patterns of clusters, the adjustment factors may be contributing causes of the original clusters. In addition, clusters identified after adjusting for individual and area-level predictors indicate area of unexplained variation, and merit further small-area investigations.