This work presents a computationally efficient real-time adaptive clustering algorithm that recognizes and adapts to dynamic changes observed in neural recordings. The algorithm consists of an off-line training phase that determines initial cluster positions, and an on-line operation phase that continuously tracks drifts in clusters and periodically verifies acute changes in cluster composition. Analysis of chronic recordings from non-human primates shows that adaptive clustering achieves an improvement of 14% in classification accuracy and demonstrates an ability to recognize acute changes with 78% accuracy, with up to 29% computational efficiency compared to the state-of-the-art. The presented algorithm is suitable for long-term chronic monitoring of neural activity in various applications such as neuroscience research and control of neural prosthetics and assistive devices.