The low efficiency of reprogramming and genomic integration of virus vectors obscure the potential application of induced pluripotent stem (iPS) cells; therefore, identification of chemicals and cooperative factors that may improve the generation of iPS cells will be of great value. Moreover, the cellular mechanisms that limit the reprogramming efficiency need to be investigated. Through screening a chemical library, we found that two chemicals reported to upregulate E-cadherin considerably increase the reprogramming efficiency. Further study of the process indicated that E-cadherin is upregulated during reprogramming and the established iPS cells possess E-cadherin-mediated cell-cell contact, morphologically indistinguishable from embryonic stem (ES) cells. Our experiments also demonstrate that overexpression of E-cadherin significantly enhances reprogramming efficiency, whereas knockdown of endogenous E-cadherin reduces the efficiency. Consistently, abrogation of cell-cell contact by the inhibitory peptide or the neutralizing antibody against the extracellular domain of E-cadherin compromises iPS cell generation. Further mechanistic study reveals that adhesive binding activity of E-cadherin is required. Our results highlight the critical role of E-cadherin-mediated cell-cell contact in reprogramming and suggest new routes for more efficient iPS cell generation.