diff --git a/railties/CHANGELOG.md b/railties/CHANGELOG.md
index 8c536982fcfc294ad387d3ca748883c29b79a183..f88e6242c02872c1f4771ed01ed1add33c222963 100644
--- a/railties/CHANGELOG.md
+++ b/railties/CHANGELOG.md
@@ -1,3 +1,7 @@
+*   Newly generated applications get a `README.md` in Markdown.
+
+    *Xavier Noria*
+
 *   Remove the documentation tasks `doc:app`, `doc:rails`, and `doc:guides`.
 
     *Xavier Noria*
diff --git a/railties/lib/rails/generators/rails/app/app_generator.rb b/railties/lib/rails/generators/rails/app/app_generator.rb
index b6e6642f119a14bb2d340621fd863e5a44867f78..977f5a1c03f8b5b74e7c88fdb9832b18ea1abb69 100644
--- a/railties/lib/rails/generators/rails/app/app_generator.rb
+++ b/railties/lib/rails/generators/rails/app/app_generator.rb
@@ -38,7 +38,7 @@ def rakefile
     end
 
     def readme
-      copy_file "README.rdoc", "README.rdoc"
+      copy_file "README.md", "README.md"
     end
 
     def gemfile
diff --git a/railties/lib/rails/generators/rails/app/templates/README.rdoc b/railties/lib/rails/generators/rails/app/templates/README.md
similarity index 97%
rename from railties/lib/rails/generators/rails/app/templates/README.rdoc
rename to railties/lib/rails/generators/rails/app/templates/README.md
index db0fbe031b904d7e0326f6d2988a8902f98106f1..55e144da180b215467d58fe4c01ba46882f0190d 100644
--- a/railties/lib/rails/generators/rails/app/templates/README.rdoc
+++ b/railties/lib/rails/generators/rails/app/templates/README.md
@@ -1,4 +1,4 @@
-== README
+## README
 
 This README would normally document whatever steps are necessary to get the
 application up and running.
diff --git a/railties/test/generators/actions_test.rb b/railties/test/generators/actions_test.rb
index c4b64413972bd77961a5f9390f3d479f8daab87a..c6de2c1fb9bd8684546f728c82c1182251b90752 100644
--- a/railties/test/generators/actions_test.rb
+++ b/railties/test/generators/actions_test.rb
@@ -222,14 +222,14 @@ def test_route_should_add_data_to_the_routes_block_in_config_routes
   def test_readme
     run_generator
     Rails::Generators::AppGenerator.expects(:source_root).times(2).returns(destination_root)
-    assert_match "application up and running", action(:readme, "README.rdoc")
+    assert_match "application up and running", action(:readme, "README.md")
   end
 
   def test_readme_with_quiet
     generator(default_arguments, quiet: true)
     run_generator
     Rails::Generators::AppGenerator.expects(:source_root).times(2).returns(destination_root)
-    assert_no_match "application up and running", action(:readme, "README.rdoc")
+    assert_no_match "application up and running", action(:readme, "README.md")
   end
 
   def test_log
diff --git a/railties/test/generators/app_generator_test.rb b/railties/test/generators/app_generator_test.rb
index 8cef40b1519bd07f599e3daf7b984ec09efff1ea..ca26e0c8d7077a47ac8658c3613f378e0e0168b0 100644
--- a/railties/test/generators/app_generator_test.rb
+++ b/railties/test/generators/app_generator_test.rb
@@ -5,7 +5,7 @@
 
 DEFAULT_APP_FILES = %w(
   .gitignore
-  README.rdoc
+  README.md
   Gemfile
   Rakefile
   config.ru