diff --git a/railties/lib/rails/commands.rb b/railties/lib/rails/commands.rb
index de93a876156739b925fdadd9892541edba89da1b..aad1170b563a25677a799e4cf4121f1e3d9f0a9e 100644
--- a/railties/lib/rails/commands.rb
+++ b/railties/lib/rails/commands.rb
@@ -38,6 +38,10 @@
 when 'application', 'runner'
   require "rails/commands/#{command}"
 
+when 'new'
+  puts "Can't initialize a new Rails application within the directory of another, please change to a non-Rails directory first.\n"
+  puts "Type 'rails' for help."
+
 when '--version', '-v'
   ARGV.unshift '--version'
   require 'rails/commands/application'
@@ -53,6 +57,8 @@
  server      Start the Rails server (short-cut alias: "s")
  dbconsole   Start a console for the database specified in config/database.yml
              (short-cut alias: "db")
+ new         Create a new Rails application. "rails new my_app" creates a
+             new application called MyApp in "./my_app"
 
 In addition to those, there are:
  application  Generate the Rails application code
diff --git a/railties/lib/rails/commands/application.rb b/railties/lib/rails/commands/application.rb
index 8a8143e00e8c3654a52386237fd167392c2cf4b0..a3a5aed39974259994ed8b3ce4e0e884cdf41d94 100644
--- a/railties/lib/rails/commands/application.rb
+++ b/railties/lib/rails/commands/application.rb
@@ -4,7 +4,12 @@
   exit(0)
 end
 
-ARGV << "--help"   if ARGV.empty?
+if ARGV.first != "new" || ARGV.empty?
+  ARGV[0] = "--help"
+else
+  ARGV.shift
+end
+
 require 'rubygems' if ARGV.include?("--dev")
 
 require 'rails/generators'
diff --git a/railties/lib/rails/generators/rails/app/USAGE b/railties/lib/rails/generators/rails/app/USAGE
index 36d6061a5990f859ca58f62c0dde9157c36d6c8b..9e7a78d132c8c1d25a54cbeb788ca92118c650e6 100644
--- a/railties/lib/rails/generators/rails/app/USAGE
+++ b/railties/lib/rails/generators/rails/app/USAGE
@@ -1,9 +1,9 @@
 Description:
-    The 'rails' command creates a new Rails application with a default
+    The 'rails new' command creates a new Rails application with a default
     directory structure and configuration at the path you specify.
 
 Example:
-    rails ~/Code/Ruby/weblog
+    rails new ~/Code/Ruby/weblog
 
     This generates a skeletal Rails installation in ~/Code/Ruby/weblog.
     See the README in the newly created application to get going.
diff --git a/railties/lib/rails/generators/rails/app/app_generator.rb b/railties/lib/rails/generators/rails/app/app_generator.rb
index cd4a3dce4e015eebfecb370b9bc9db70f851bd60..fc971907df5ab859cb3c8e8bf962b38b735c432a 100644
--- a/railties/lib/rails/generators/rails/app/app_generator.rb
+++ b/railties/lib/rails/generators/rails/app/app_generator.rb
@@ -149,8 +149,7 @@ module Generators
     # can change in Ruby 1.8.7 when we FileUtils.cd.
     RAILS_DEV_PATH = File.expand_path("../../../../../..", File.dirname(__FILE__))
 
-    RESERVED_NAMES = %w[generate g console c server s dbconsole db
-                        application destroy benchmarker profiler
+    RESERVED_NAMES = %w[application destroy benchmarker profiler
                         plugin runner test]
 
     class AppGenerator < Base