In gene expression profiling studies, including single-cell RNA-seq (scRNAseq) analyses, the identification and characterization of co-expressed genes provides critical information on cell identity and function. Gene co-expression clustering in scRNA-seq data presents certain challenges. We show that commonly used methods for single cell data are not capable of identifying co-expressed genes accurately, and produce results that substantially limit biological expectations of co-expressed genes. Herein, we present scLM, a gene co-clustering algorithm tailored to single cell data that performs well at detecting gene clusters with significant biologic context. scLM can simultaneously cluster multiple single-cell datasets, i.e. consensus clustering, enabling users to leverage single cell data from multiple sources for novel comparative analysis. scLM takes raw count data as input and preserves biological variations without being influenced by batch effects from multiple datasets. Results from both simulation data and experimental data demonstrate that scLM outperforms the existing methods with considerably improved accuracy. To illustrate the biological insights of scLM, we apply it to our in-house and public experimental scRNA-seq datasets. scLM identifies novel functional gene modules and refines cell states, which facilitates mechanism discovery and understanding of complex biosystems such as cancers. A user-friendly R package with all the key features of the scLM method is available at https://github.com/QSong-WF/scLM. ### Competing Interest Statement The authors have declared no competing interest.
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