Manifold regularization (MR) has become one of the most widely used approaches in the semi-supervised learning field. It has shown superiority by exploiting the local manifold structure of both labeled and unlabeled data. The manifold structure is modeled by constructing a Laplacian graph and then incorporated in learning through a smoothness regularization term. Hence the labels of labeled and unlabeled data vary smoothly along the geodesics on the manifold. However, MR has ignored the discriminative ability of the labeled and unlabeled data. To address the problem, we propose an enhanced MR framework for semi-supervised classification in which the local discriminative information of the labeled and unlabeled data is explicitly exploited. To make full use of labeled data, we firstly employ a semi-supervised clustering method to discover the underlying data space structure of the whole dataset. Then we construct a local discrimination graph to model the discriminative information of labeled and unlabeled data according to the discovered intrinsic structure. Therefore, the data points that may be from different clusters, though similar on the manifold, are enforced far away from each other. Finally, the discrimination graph is incorporated into the MR framework. In particular, we utilize semi-supervised fuzzy c-means and Laplacian regularized Kernel minimum squared error for semi-supervised clustering and classification, respectively. Experimental results on several benchmark datasets and face recognition demonstrate the effectiveness of our proposed method.