diff --git a/lib/ace/mode/folding/markdown.js b/lib/ace/mode/folding/markdown.js
new file mode 100644
index 00000000..aae7179a
--- /dev/null
+++ b/lib/ace/mode/folding/markdown.js
@@ -0,0 +1,125 @@
+/* ***** BEGIN LICENSE BLOCK *****
+ * Distributed under the BSD license:
+ *
+ * Copyright (c) 2010, Ajax.org B.V.
+ * All rights reserved.
+ *
+ * Redistribution and use in source and binary forms, with or without
+ * modification, are permitted provided that the following conditions are met:
+ *     * Redistributions of source code must retain the above copyright
+ *       notice, this list of conditions and the following disclaimer.
+ *     * Redistributions in binary form must reproduce the above copyright
+ *       notice, this list of conditions and the following disclaimer in the
+ *       documentation and/or other materials provided with the distribution.
+ *     * Neither the name of Ajax.org B.V. nor the
+ *       names of its contributors may be used to endorse or promote products
+ *       derived from this software without specific prior written permission.
+ *
+ * THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND
+ * ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
+ * WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
+ * DISCLAIMED. IN NO EVENT SHALL AJAX.ORG B.V. BE LIABLE FOR ANY
+ * DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES
+ * (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES;
+ * LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND
+ * ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT
+ * (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS
+ * SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+ *
+ * ***** END LICENSE BLOCK ***** */
+
+define(function(require, exports, module) {
+"use strict";
+
+var oop = require("../../lib/oop");
+var BaseFoldMode = require("./fold_mode").FoldMode;
+var Range = require("../../range").Range;
+
+var FoldMode = exports.FoldMode = function() {};
+oop.inherits(FoldMode, BaseFoldMode);
+
+(function() {
+    this.foldingStartMarker = /^(?:[=-]+\s*$|#{1,6} |`{3})/;
+
+    this.getFoldWidget = function(session, foldStyle, row) {
+        var line = session.getLine(row);
+        if (!this.foldingStartMarker.test(line))
+            return "";
+
+        if (line[0] == "`") {
+            if (session.bgTokenizer.getState(row) == "start")
+                return "end";
+            return "start";
+        }
+
+        return "start";
+    };
+
+    this.getFoldWidgetRange = function(session, foldStyle, row) {
+        var line = session.getLine(row);
+        var startColumn = line.length;
+        var maxRow = session.getLength();
+        var startRow = row;
+        var endRow = row;
+        if (!line.match(this.foldingStartMarker))
+            return;
+
+        if (line[0] == "`") {
+            if (session.bgTokenizer.getState(row) !== "start") {
+                while (++row < maxRow) {
+                    line = session.getLine(row);
+                    if (line[0] == "`" & line.substring(0, 3) == "```")
+                        break;
+                }
+                return new Range(startRow, startColumn, row, 0);
+            } else {
+                while (row -- > 0) {
+                    line = session.getLine(row);
+                    if (line[0] == "`" & line.substring(0, 3) == "```")
+                        break;
+                }
+                return new Range(row, line.length, startRow, 0);
+            }
+        }
+
+        var token;
+        function isHeading(row) {
+            token = session.getTokens(row)[0];
+            return token && token.type.lastIndexOf(heading, 0) === 0;
+        }
+
+        var heading = "markup.heading";
+        function getLevel() {
+            var ch = token.value[0];
+            if (ch == "=") return 6;
+            if (ch == "-") return 5;
+            return 7 - token.value.search(/[^#]/);
+        }
+
+        if (isHeading(row)) {
+            var startHeadingLevel = getLevel();
+            while (++row < maxRow) {
+                if (!isHeading(row))
+                    continue;
+                var level = getLevel();
+                if (level >= startHeadingLevel)
+                    break;
+            }
+
+            endRow = row - (!token || ["=", "-"].indexOf(token.value[0]) == -1 ? 1 : 2);
+
+            if (endRow > startRow) {
+                while (endRow > startRow && /^\s*$/.test(session.getLine(endRow)))
+                    endRow--;
+            }
+
+            if (endRow > startRow) {
+                var endColumn = session.getLine(endRow).length;
+                return new Range(startRow, startColumn, endRow, endColumn);
+            }
+        }
+    };
+
+}).call(FoldMode.prototype);
+
+});
diff --git a/lib/ace/mode/markdown.js b/lib/ace/mode/markdown.js
index 7b74fbcb..969c3061 100644
--- a/lib/ace/mode/markdown.js
+++ b/lib/ace/mode/markdown.js
@@ -38,6 +38,7 @@ var XmlMode = require("./xml").Mode;
 var HtmlMode = require("./html").Mode;
 var Tokenizer = require("../tokenizer").Tokenizer;
 var MarkdownHighlightRules = require("./markdown_highlight_rules").MarkdownHighlightRules;
+var MarkdownFoldMode = require("./folding/markdown").FoldMode;
 
 var Mode = function() {
     var highlighter = new MarkdownHighlightRules();
@@ -49,6 +50,8 @@ var Mode = function() {
       "xml-": XmlMode,
       "html-": HtmlMode
     });
+    
+    this.foldingRules = new MarkdownFoldMode();
 };
 oop.inherits(Mode, TextMode);