In traditional file systems, data clustering and grouping have improved small file performance. These schemes make it possible for file systems to use large data transfers in accessing small files, reducing disk I/Os. However, as file systems age, disks become too fragmented to support the grouping and clustering. To offer a solution to this problem, we describe a De-Fragmented File System (DFFS), which gradually alleviates fragmentation of small files. By using data cached in memory, DFFS dynamically relocates blocks of small fragmented files, clustering them on the disks contiguously. In addition, DFFS relocates small related files in the same directory, grouping them at contiguous disk locations.