diff --git a/lib/ace/mode/folding/lua.js b/lib/ace/mode/folding/lua.js
new file mode 100644
index 00000000..c01f1e9f
--- /dev/null
+++ b/lib/ace/mode/folding/lua.js
@@ -0,0 +1,75 @@
+/* ***** BEGIN LICENSE BLOCK *****
+ * Distributed under the BSD license:
+ *
+ * Copyright (c) 2012, 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 = /\b(function|local\s+function|then|do|repeat)\b|{[ \t]*$|\[\[/;
+    this.foldingStopMarker = /\bend\b|^\s*}|\]\]/;
+    
+    this.getFoldWidgetRange = function(session, foldStyle, row) {
+        var lines = session.doc.getAllLines(row);
+        var line = lines[row];
+        
+        var re = this.foldingStartMarker.test(line) ? this.foldingStartMarker : this.foldingStopMarker;
+
+        if (this.foldingStartMarker.test(line)) {            
+            for (var i = row + 1, l = session.getLength(); i < l; i++) {
+                if (re.test(lines[i]))
+                    break;
+            }
+
+            return new Range(row, line.length, i, 0);
+        }
+
+        if (this.foldingStopMarker.test(line)) {
+            for (var i = row - 1; i >= 0; i--) {
+                line = lines[i];
+                if (re.test(line))
+                    break;
+            }
+
+            return new Range(i, line.length, row, 0);
+        }
+    };
+    
+}).call(FoldMode.prototype);
+
+});
diff --git a/lib/ace/mode/lua.js b/lib/ace/mode/lua.js
index efb3ffd1..e1a6143a 100644
--- a/lib/ace/mode/lua.js
+++ b/lib/ace/mode/lua.js
@@ -35,10 +35,12 @@ var oop = require("../lib/oop");
 var TextMode = require("./text").Mode;
 var Tokenizer = require("../tokenizer").Tokenizer;
 var LuaHighlightRules = require("./lua_highlight_rules").LuaHighlightRules;
+var LuaFoldMode = require("./folding/lua").FoldMode;
 var Range = require("../range").Range;
 
 var Mode = function() {
     this.$tokenizer = new Tokenizer(new LuaHighlightRules().getRules());
+    this.foldingRules = new LuaFoldMode();
 };
 oop.inherits(Mode, TextMode);