The incidence of skin cancer has been increasing in recent years and it can become dangerous if not detected early. Computer-aided diagnosis systems can help the dermatologists in assisting with skin cancer detection by examining the features more critically. In this article, a detailed review of preprocessing and segmentation methods is done on skin lesion images by investigating existing and prevalent segmentation methods for the diagnosis of skin cancer. The pre-processing stage is divided into two phases, in the first phase, a median filter is used to remove the artifact; and in the second phase, an improved K-means clustering with outlier removal (KMOR) algorithm is suggested. The proposed method was tested in a publicly available Danderm database. The improved cluster-based algorithm gives an accuracy of 92.8% with a sensitivity of 93% and specificity of 90% with an AUC value of 0.90435. From the experimental results, it is evident that the clustering algorithm has performed well in detecting the border of the lesion and is suitable for pre-processing dermoscopic images. Copyright © 2020, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.