This work describes a novel distributed algorithm, called the Cluster Allocation Algorithm (CAA), for the restoration scheme in a WDM mesh network. The nodes search for neighboring nodes and establish the relationship between them to build numerous logical clusters. Each cluster has a unique manager, called Cluster Head (CH) that searches for routing path, wavelength assignment (RWA) and restoration paths upon receiving requests from its cluster members. Some clusters might comprise only one CH, and cluster members in each cluster can be directly connected to CH. The communication among clusters is also negotiated through the manager. The selected restoration path is pre-computed from the CH to the destination node with the minimum cost function. Therefore, restoration paths can be sought with quick assignment of wavelength routings when the link, node or channel failure occurs based on the status of traffic load, number of nodes and transmission time. The primary aim of this work is to use clusters near faults to share the restoration load throughout the mesh network. The system performance of the CAA is compared with p-cycle, double cycle and DMRA methodologies in terms of restoration time and non-restoration ratio.