A prototype of cross-membrane signal transduction is that extracellular binding of cell surface receptors to their ligands induces intracellular signalling cascades. However, much less is known about the process in the opposite direction, called inside-out signalling. Recent studies show that it plays a more important role in regulating the functions of many cell surface receptors than we used to think. In particular, in cadherin-mediated cell adhesion, recent experiments indicate that intracellular binding of the scaffold protein p120-catenin (p120ctn) can promote extracellular clustering of cadherin and alter its adhesive function. The underlying mechanism, however, is not well understood. To explore possible mechanisms, we designed a new multiscale simulation procedure. Using all-atom molecular dynamics simulations, we found that the conformational dynamics of the cadherin extracellular region can be altered by the intracellular binding of p120ctn. More intriguingly, by integrating all-atom simulation results into coarse-grained random sampling, we showed that the altered conformational dynamics of cadherin caused by the binding of p120ctn can increase the probability of lateral interactions between cadherins on the cell surface. These results suggest that p120ctn could allosterically regulate the cis-dimerization of cadherin through two mechanisms. First, p120ctn controls the extracellular conformational dynamics of cadherin. Second, p120ctn oligomerization can further promote cadherin clustering. Therefore, our study provides a mechanistic foundation for the inside-out signalling in cadherin-mediated cell adhesion, while the computational framework can be generally applied to other cross-membrane signal transduction systems.