diff --git a/pkg/controller/podautoscaler/horizontal.go b/pkg/controller/podautoscaler/horizontal.go
index 4220f6158f..b73c1b15c6 100644
--- a/pkg/controller/podautoscaler/horizontal.go
+++ b/pkg/controller/podautoscaler/horizontal.go
@@ -17,12 +17,14 @@ limitations under the License.
 package podautoscaler
 
 import (
+	"encoding/json"
 	"fmt"
 	"math"
 	"time"
 
 	"github.com/golang/glog"
 	"k8s.io/kubernetes/pkg/api"
+	"k8s.io/kubernetes/pkg/api/resource"
 	"k8s.io/kubernetes/pkg/api/unversioned"
 	"k8s.io/kubernetes/pkg/apis/extensions"
 	"k8s.io/kubernetes/pkg/client/record"
@@ -35,6 +37,9 @@ const (
 	// Usage shoud exceed the tolerance before we start downscale or upscale the pods.
 	// TODO: make it a flag or HPA spec element.
 	tolerance = 0.1
+
+	HpaCustomMetricsDefinitionAnnotationName = "alpha/definiton.custom-metrics.podautoscaler.kubernetes.io"
+	HpaCustomMetricsStatusAnnotationName     = "alpha/status.custom-metrics.podautoscaler.kubernetes.io"
 )
 
 type HorizontalController struct {
@@ -93,6 +98,71 @@ func (a *HorizontalController) computeReplicasForCPUUtilization(hpa extensions.H
 	}
 }
 
+// Computes the desired number of replicas based on the CustomMetrics passed in cmAnnotation as json-serialized
+// extensions.CustomMetricsTargetList.
+// Returns number of replicas, status string (also json-serialized extensions.CustomMetricsCurrentStatusList),
+// last timestamp of the metrics involved in computations or error, if occurred.
+func (a *HorizontalController) computeReplicasForCustomMetrics(hpa extensions.HorizontalPodAutoscaler, scale *extensions.Scale,
+	cmAnnotation string) (int, string, time.Time, error) {
+
+	currentReplicas := scale.Status.Replicas
+	replicas := 0
+	timestamp := time.Time{}
+
+	if cmAnnotation == "" {
+		return 0, "", time.Time{}, nil
+	}
+
+	var targetList extensions.CustomMetricTargetList
+	if err := json.Unmarshal([]byte(cmAnnotation), &targetList); err != nil {
+		return 0, "", time.Time{}, fmt.Errorf("failed to parse custom metrics annotation: %v", err)
+	}
+	if len(targetList.Items) == 0 {
+		return 0, "", time.Time{}, fmt.Errorf("no custom metrics in annotation")
+	}
+
+	statusList := extensions.CustomMetricCurrentStatusList{
+		Items: make([]extensions.CustomMetricCurrentStatus, 0),
+	}
+
+	for _, customMetricTarget := range targetList.Items {
+		value, currentTimestamp, err := a.metricsClient.GetCustomMetric(customMetricTarget.Name, hpa.Namespace, scale.Status.Selector)
+		// TODO: what to do on partial errors (like metrics obtained for 75% of pods).
+		if err != nil {
+			a.eventRecorder.Event(&hpa, api.EventTypeWarning, "FailedGetCustomMetrics", err.Error())
+			return 0, "", time.Time{}, fmt.Errorf("failed to get custom metric value: %v", err)
+		}
+		floatTarget := float64(customMetricTarget.TargetValue.MilliValue()) / 1000.0
+		usageRatio := *value / floatTarget
+
+		replicaCountProposal := 0
+		if math.Abs(1.0-usageRatio) > tolerance {
+			replicaCountProposal = int(math.Ceil(usageRatio * float64(currentReplicas)))
+		} else {
+			replicaCountProposal = currentReplicas
+		}
+		if replicaCountProposal > replicas {
+			timestamp = currentTimestamp
+			replicas = replicaCountProposal
+		}
+		quantity, err := resource.ParseQuantity(fmt.Sprintf("%.3f", *value))
+		if err != nil {
+			return 0, "", time.Time{}, fmt.Errorf("failed to set custom metric value: %v", err)
+		}
+		statusList.Items = append(statusList.Items, extensions.CustomMetricCurrentStatus{
+			Name:         customMetricTarget.Name,
+			CurrentValue: *quantity,
+		})
+	}
+	byteStatusList, err := json.Marshal(statusList)
+	if err != nil {
+		return 0, "", time.Time{}, fmt.Errorf("failed to serialize custom metric status: %v", err)
+	}
+
+	return replicas, string(byteStatusList), timestamp, nil
+
+}
+
 func (a *HorizontalController) reconcileAutoscaler(hpa extensions.HorizontalPodAutoscaler) error {
 	reference := fmt.Sprintf("%s/%s/%s", hpa.Spec.ScaleRef.Kind, hpa.Namespace, hpa.Spec.ScaleRef.Name)
 
@@ -103,10 +173,40 @@ func (a *HorizontalController) reconcileAutoscaler(hpa extensions.HorizontalPodA
 	}
 	currentReplicas := scale.Status.Replicas
 
-	desiredReplicas, currentUtilization, timestamp, err := a.computeReplicasForCPUUtilization(hpa, scale)
-	if err != nil {
-		a.eventRecorder.Event(&hpa, api.EventTypeWarning, "FailedComputeReplicas", err.Error())
-		return fmt.Errorf("failed to compute desired number of replicas based on CPU utilization for %s: %v", reference, err)
+	cpuDesiredReplicas := 0
+	var cpuCurrentUtilization *int = nil
+	cpuTimestamp := time.Time{}
+
+	cmDesiredReplicas := 0
+	cmStatus := ""
+	cmTimestamp := time.Time{}
+
+	if hpa.Spec.CPUUtilization != nil {
+		cpuDesiredReplicas, cpuCurrentUtilization, cpuTimestamp, err = a.computeReplicasForCPUUtilization(hpa, scale)
+		if err != nil {
+			a.eventRecorder.Event(&hpa, api.EventTypeWarning, "FailedComputeReplicas", err.Error())
+			return fmt.Errorf("failed to compute desired number of replicas based on CPU utilization for %s: %v", reference, err)
+		}
+	}
+
+	if cmAnnotation, cmAnnotationFound := hpa.Annotations[HpaCustomMetricsDefinitionAnnotationName]; cmAnnotationFound {
+		cmDesiredReplicas, cmStatus, cmTimestamp, err = a.computeReplicasForCustomMetrics(hpa, scale, cmAnnotation)
+		if err != nil {
+			a.eventRecorder.Event(&hpa, api.EventTypeWarning, "FailedComputeCMReplicas", err.Error())
+			return fmt.Errorf("failed to compute desired number of replicas based on Custom Metrics for %s: %v", reference, err)
+		}
+	}
+
+	desiredReplicas := 0
+	timestamp := time.Time{}
+
+	if cpuDesiredReplicas > desiredReplicas {
+		desiredReplicas = cpuDesiredReplicas
+		timestamp = cpuTimestamp
+	}
+	if cmDesiredReplicas > desiredReplicas {
+		desiredReplicas = cmDesiredReplicas
+		timestamp = cmTimestamp
 	}
 
 	if hpa.Spec.MinReplicas != nil && desiredReplicas < *hpa.Spec.MinReplicas {
@@ -158,9 +258,13 @@ func (a *HorizontalController) reconcileAutoscaler(hpa extensions.HorizontalPodA
 	hpa.Status = extensions.HorizontalPodAutoscalerStatus{
 		CurrentReplicas:                 currentReplicas,
 		DesiredReplicas:                 desiredReplicas,
-		CurrentCPUUtilizationPercentage: currentUtilization,
+		CurrentCPUUtilizationPercentage: cpuCurrentUtilization,
 		LastScaleTime:                   hpa.Status.LastScaleTime,
 	}
+	if cmStatus != "" {
+		hpa.Annotations[HpaCustomMetricsStatusAnnotationName] = cmStatus
+	}
+
 	if rescale {
 		now := unversioned.NewTime(time.Now())
 		hpa.Status.LastScaleTime = &now
diff --git a/pkg/controller/podautoscaler/horizontal_test.go b/pkg/controller/podautoscaler/horizontal_test.go
index bd0bd63b69..c60bb812e5 100644
--- a/pkg/controller/podautoscaler/horizontal_test.go
+++ b/pkg/controller/podautoscaler/horizontal_test.go
@@ -62,6 +62,7 @@ type testCase struct {
 	CPUTarget           int
 	reportedLevels      []uint64
 	reportedCPURequests []resource.Quantity
+	cmTarget            *extensions.CustomMetricTargetList
 	scaleUpdated        bool
 	eventCreated        bool
 	verifyEvents        bool
@@ -101,6 +102,14 @@ func (tc *testCase) prepareTestClient(t *testing.T) *testclient.Fake {
 		if tc.CPUTarget > 0.0 {
 			obj.Items[0].Spec.CPUUtilization = &extensions.CPUTargetUtilization{TargetPercentage: tc.CPUTarget}
 		}
+		if tc.cmTarget != nil {
+			b, err := json.Marshal(tc.cmTarget)
+			if err != nil {
+				t.Fatalf("Failed to marshal cm: %v", err)
+			}
+			obj.Items[0].Annotations = make(map[string]string)
+			obj.Items[0].Annotations[HpaCustomMetricsDefinitionAnnotationName] = string(b)
+		}
 		return true, obj, nil
 	})
 
@@ -229,6 +238,25 @@ func TestScaleUp(t *testing.T) {
 	tc.runTest(t)
 }
 
+func TestScaleUpCM(t *testing.T) {
+	tc := testCase{
+		minReplicas:     2,
+		maxReplicas:     6,
+		initialReplicas: 3,
+		desiredReplicas: 4,
+		CPUTarget:       0,
+		cmTarget: &extensions.CustomMetricTargetList{
+			Items: []extensions.CustomMetricTarget{{
+				Name:        "qps",
+				TargetValue: resource.MustParse("15.0"),
+			}},
+		},
+		reportedLevels:      []uint64{20, 10, 30},
+		reportedCPURequests: []resource.Quantity{resource.MustParse("1.0"), resource.MustParse("1.0"), resource.MustParse("1.0")},
+	}
+	tc.runTest(t)
+}
+
 func TestScaleDown(t *testing.T) {
 	tc := testCase{
 		minReplicas:         2,
@@ -242,6 +270,24 @@ func TestScaleDown(t *testing.T) {
 	tc.runTest(t)
 }
 
+func TestScaleDownCM(t *testing.T) {
+	tc := testCase{
+		minReplicas:     2,
+		maxReplicas:     6,
+		initialReplicas: 5,
+		desiredReplicas: 3,
+		CPUTarget:       0,
+		cmTarget: &extensions.CustomMetricTargetList{
+			Items: []extensions.CustomMetricTarget{{
+				Name:        "qps",
+				TargetValue: resource.MustParse("20"),
+			}}},
+		reportedLevels:      []uint64{12, 12, 12, 12, 12},
+		reportedCPURequests: []resource.Quantity{resource.MustParse("1.0"), resource.MustParse("1.0"), resource.MustParse("1.0"), resource.MustParse("1.0"), resource.MustParse("1.0")},
+	}
+	tc.runTest(t)
+}
+
 func TestTolerance(t *testing.T) {
 	tc := testCase{
 		minReplicas:         1,
@@ -255,6 +301,23 @@ func TestTolerance(t *testing.T) {
 	tc.runTest(t)
 }
 
+func TestToleranceCM(t *testing.T) {
+	tc := testCase{
+		minReplicas:     1,
+		maxReplicas:     5,
+		initialReplicas: 3,
+		desiredReplicas: 3,
+		cmTarget: &extensions.CustomMetricTargetList{
+			Items: []extensions.CustomMetricTarget{{
+				Name:        "qps",
+				TargetValue: resource.MustParse("20"),
+			}}},
+		reportedLevels:      []uint64{20, 21, 21},
+		reportedCPURequests: []resource.Quantity{resource.MustParse("0.9"), resource.MustParse("1.0"), resource.MustParse("1.1")},
+	}
+	tc.runTest(t)
+}
+
 func TestMinReplicas(t *testing.T) {
 	tc := testCase{
 		minReplicas:         2,