The emerging Bluetooth technology is a best-known PAN (Personal Area Networks) technology. It still has some issues left open in the current specification. Among them, the scatternet formation and routing are two major issues. In this paper, we proposed a new Bluetooth scatternet formation algorithm and its routing algorithm. Our method constructs and maintains a scatternet in a distributed way and does not need all nodes to be in the transmission range of each other. We use the PARK mode to let Bluetooth devices have more chances to link each other in order to build a better-connected scatternet. We also propose an on demand routing algorithm for the scatternet constructed. Experimental results show that the proposed algorithms are quite efficient and effective.