I want to change the cluster size of an MS-DOS FAT16 volume to something smaller than the default (Which right now is 32KB or 64 sects). I know there are programs like Partition Magic that do it, but can anyone tell me the procedure for doing it manually?

FAT16 Cluster size is a function of the size of the partition. That is the way the system works.

The smaller the partition, the smaller the cluster.
parition size 2k cluster
128 4k cluster
256 8k
512 16k
1024 32k

You can use Partition magic to make smaller partitions, and therefore smaller clusters, or archive your data and simply use fdisk to create smaller partitons.

FWIW, Why use FAT16? The only reason to use FAT16 is if you are using a 16-bit DOS (6.22 or earlier). Win95+ will read both FAT16 and FAT32, FAT32 being more efficient.

format/n:
Do a format/? at the dos prompt. Be careful.

A follow up to my previous post, it would seem my table didn't post correctly.

A 128 (or smaller) MB partition yields a 2k cluster size.

Between 128 and 256 MB, 4k.
Between 256 and 512 MB, 8k.
Between 512 and 1024, 16k.
Between 1024 and 2056, 32k.

Use smaller partitions to get smaller clusters.

i might be wrong but cluster size can't be made _smaller_ in fat16 since the number of allocation units need to fit a word. i haven't seen this documented, but i do suspect this to be the case, since the default sectors per cluster (allocated by ms-dos format program) seems to work out a way that the number of allocation units (clusters) is always < 65536.
Dan, the /n switch in format changed number of sectors per track for floppy but won;t try on my hard disk. Thanks to both.

If you are using such large partitions on a small drive that cluster size is a problem, you can save that space by using dblspace on the drive. It not only saves space by compression but it also treats the compressed file as one file thereby not having much cluster waste.