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A fast, completely automated method to create 3D watertight building models from airborne LiDAR point clouds is presented. The proposed method analyzes the scene content and produces multi-layer rooftops with complex boundaries and vertical walls that connect rooftops to the ground. A graph cuts based method is used to segment vegetative areas from the rest of scene content. The ground terrain and building rooftop patches are then extracted utilizing our technique, the hierarchical Euclidean clustering. Our method adopts a “divide-and-conquer” strategy. Once potential points on rooftops are segmented from terrain and vegetative areas, the whole scene is divided into individual pendent processing units which represent potential building footprints. For each individual building region, significant features on the rooftop are further detected using a specifically designed region growing algorithm with smoothness constraint. Boundaries for all of these features are refined in order to produce strict description. After this refinement, mesh models could be generated using an existing robust dual contouring method.