diff --git a/src/lib/core/style/_menu-common.scss b/src/lib/core/style/_menu-common.scss
index 25e87e88802f..fc96304e1791 100644
--- a/src/lib/core/style/_menu-common.scss
+++ b/src/lib/core/style/_menu-common.scss
@@ -68,4 +68,22 @@ $md-menu-side-padding: 16px !default;
   &.md-menu-before.md-menu-above {
     transform-origin: right bottom;
   }
+
+  [dir='rtl'] & {
+    &.md-menu-after.md-menu-below {
+      transform-origin: right top;
+    }
+
+    &.md-menu-after.md-menu-above {
+      transform-origin: right bottom;
+    }
+
+    &.md-menu-before.md-menu-below {
+      transform-origin: left top;
+    }
+
+    &.md-menu-before.md-menu-above {
+      transform-origin: left bottom;
+    }
+  }
 }
\ No newline at end of file
diff --git a/src/lib/menu/menu-trigger.ts b/src/lib/menu/menu-trigger.ts
index 083ada1e61a1..c0bc3716e2ec 100644
--- a/src/lib/menu/menu-trigger.ts
+++ b/src/lib/menu/menu-trigger.ts
@@ -1,18 +1,21 @@
 import {
+    AfterViewInit,
     Directive,
     ElementRef,
+    EventEmitter,
     Input,
+    OnDestroy,
+    Optional,
     Output,
-    EventEmitter,
+    Renderer,
     ViewContainerRef,
-    AfterViewInit,
-    OnDestroy,
-    Renderer
 } from '@angular/core';
 import {MdMenuPanel} from './menu-panel';
 import {MdMenuMissingError} from './menu-errors';
 import {
     isFakeMousedownFromScreenReader,
+    Dir,
+    LayoutDirection,
     Overlay,
     OverlayState,
     OverlayRef,
@@ -51,7 +54,8 @@ export class MdMenuTrigger implements AfterViewInit, OnDestroy {
   @Output() onMenuClose = new EventEmitter<void>();
 
   constructor(private _overlay: Overlay, private _element: ElementRef,
-              private _viewContainerRef: ViewContainerRef, private _renderer: Renderer) {}
+              private _viewContainerRef: ViewContainerRef, private _renderer: Renderer,
+              @Optional() private _dir: Dir) {}
 
   ngAfterViewInit() {
     this._checkMenu();
@@ -98,6 +102,11 @@ export class MdMenuTrigger implements AfterViewInit, OnDestroy {
     this._renderer.invokeElementMethod(this._element.nativeElement, 'focus');
   }
 
+  /** The text direction of the containing app. */
+  get dir(): LayoutDirection {
+    return this._dir && this._dir.value === 'rtl' ? 'rtl' : 'ltr';
+  }
+
   /**
    * This method ensures that the menu closes when the overlay backdrop is clicked.
    * We do not use first() here because doing so would not catch clicks from within
@@ -173,9 +182,11 @@ export class MdMenuTrigger implements AfterViewInit, OnDestroy {
    */
   private _getOverlayConfig(): OverlayState {
     const overlayState = new OverlayState();
-    overlayState.positionStrategy = this._getPosition();
+    overlayState.positionStrategy = this._getPosition()
+                                        .withDirection(this.dir);
     overlayState.hasBackdrop = true;
     overlayState.backdropClass = 'md-overlay-transparent-backdrop';
+    overlayState.direction = this.dir;
     return overlayState;
   }
 
diff --git a/src/lib/menu/menu.spec.ts b/src/lib/menu/menu.spec.ts
index c6abaa6efa9d..01a6eb3219e8 100644
--- a/src/lib/menu/menu.spec.ts
+++ b/src/lib/menu/menu.spec.ts
@@ -15,9 +15,11 @@ import {
   MenuPositionY
 } from './menu';
 import {OverlayContainer} from '../core/overlay/overlay-container';
+import {Dir, LayoutDirection} from '../core/rtl/dir';
 
 describe('MdMenu', () => {
   let overlayContainerElement: HTMLElement;
+  let dir: LayoutDirection = 'ltr';
 
   beforeEach(async(() => {
     TestBed.configureTestingModule({
@@ -27,6 +29,9 @@ describe('MdMenu', () => {
         {provide: OverlayContainer, useFactory: () => {
           overlayContainerElement = document.createElement('div');
           return {getContainerElement: () => overlayContainerElement};
+        }},
+        {provide: Dir, useFactory: () => {
+          return {value: dir};
         }}
       ]
     });
@@ -74,6 +79,17 @@ describe('MdMenu', () => {
     }).not.toThrowError();
   });
 
+  it('should set the panel direction based on the trigger direction', () => {
+    dir = 'rtl';
+    const fixture = TestBed.createComponent(SimpleMenu);
+    fixture.detectChanges();
+    fixture.componentInstance.trigger.openMenu();
+    fixture.detectChanges();
+
+    const overlayPane = overlayContainerElement.children[0];
+    expect(overlayPane.getAttribute('dir')).toEqual('rtl');
+  });
+
   describe('positions', () => {
     it('should append md-menu-after and md-menu-below classes by default', () => {
       const fixture = TestBed.createComponent(SimpleMenu);