diff --git a/actionpack/test/dispatch/reloader_test.rb b/actionpack/test/dispatch/reloader_test.rb
index bd24256427630..3411bd14ea24f 100644
--- a/actionpack/test/dispatch/reloader_test.rb
+++ b/actionpack/test/dispatch/reloader_test.rb
@@ -129,6 +129,15 @@ def test_manual_reloading
     assert cleaned
   end
 
+  def test_prepend_prepare_callback
+    i = 10
+    Reloader.to_prepare { i += 1 }
+    Reloader.to_prepare(:prepend => true) { i = 0 }
+
+    Reloader.prepare!
+    assert_equal 1, i
+  end
+
   def test_cleanup_callbacks_are_called_on_exceptions
     cleaned = false
     Reloader.to_cleanup { cleaned  = true }
diff --git a/activerecord/lib/active_record/railtie.rb b/activerecord/lib/active_record/railtie.rb
index c2e31579a44ad..71772529d20d2 100644
--- a/activerecord/lib/active_record/railtie.rb
+++ b/activerecord/lib/active_record/railtie.rb
@@ -94,6 +94,11 @@ class Railtie < Rails::Railtie
       end
     end
 
+    initializer "active_record.add_watchable_files" do |app|
+      files = ["#{app.root}/db/schema.rb", "#{app.root}/db/structure.sql"]
+      config.watchable_files.concat files.select { |f| File.exist?(f) }
+    end
+
     config.after_initialize do
       ActiveSupport.on_load(:active_record) do
         instantiate_observers
diff --git a/activesupport/lib/active_support/file_update_checker.rb b/activesupport/lib/active_support/file_update_checker.rb
index 77bc5388d6551..4137bbf6a0b2b 100644
--- a/activesupport/lib/active_support/file_update_checker.rb
+++ b/activesupport/lib/active_support/file_update_checker.rb
@@ -39,30 +39,53 @@ def initialize(paths, calculate=false, &block)
       @paths = paths
       @glob  = compile_glob(@paths.extract_options!)
       @block = block
+      @updated_at = nil
       @last_update_at = calculate ? updated_at : nil
     end
 
-    def updated_at
-      all = []
-      all.concat @paths
-      all.concat Dir[@glob] if @glob
-      all.map { |path| File.mtime(path) }.max
+    # Check if any of the entries were updated. If so, the updated_at
+    # value is cached until flush! is called.
+    def updated?
+      current_updated_at = updated_at
+      if @last_update_at != current_updated_at
+        @updated_at = updated_at
+        true
+      else
+        false
+      end
     end
 
+    # Flush the cache so updated? is calculated again
+    def flush!
+      @updated_at = nil
+    end
+
+    # Execute the block given if updated. This call
+    # always flush the cache.
     def execute_if_updated
-      current_update_at = self.updated_at
-      if @last_update_at != current_update_at
-        @last_update_at = current_update_at
+      if updated?
+        @last_update_at = updated_at
         @block.call
         true
       else
         false
       end
+    ensure
+      flush!
     end
 
     private
 
-    def compile_glob(hash)
+    def updated_at #:nodoc:
+      @updated_at || begin
+        all = []
+        all.concat @paths
+        all.concat Dir[@glob] if @glob
+        all.map { |path| File.mtime(path) }.max
+      end
+    end
+
+    def compile_glob(hash) #:nodoc:
       return if hash.empty?
       globs = []
       hash.each do |key, value|
@@ -71,7 +94,7 @@ def compile_glob(hash)
       "{#{globs.join(",")}}"
     end
 
-    def compile_ext(array)
+    def compile_ext(array) #:nodoc:
       array = Array.wrap(array)
       return if array.empty?
       ".{#{array.join(",")}}"
diff --git a/activesupport/lib/active_support/i18n_railtie.rb b/activesupport/lib/active_support/i18n_railtie.rb
index 4c59fe9ac9ca7..a989ff8f57cfd 100644
--- a/activesupport/lib/active_support/i18n_railtie.rb
+++ b/activesupport/lib/active_support/i18n_railtie.rb
@@ -17,7 +17,8 @@ def self.reloader
     # point, no path was added to the reloader, I18n.reload! is not triggered
     # on to_prepare callbacks. This will only happen on the config.after_initialize
     # callback below.
-    initializer "i18n.callbacks" do
+    initializer "i18n.callbacks" do |app|
+      app.reloaders << I18n::Railtie.reloader
       ActionDispatch::Reloader.to_prepare do
         I18n::Railtie.reloader.execute_if_updated
       end
diff --git a/activesupport/test/file_update_checker_test.rb b/activesupport/test/file_update_checker_test.rb
index a5a9b7a6821db..52c1f3260d2e2 100644
--- a/activesupport/test/file_update_checker_test.rb
+++ b/activesupport/test/file_update_checker_test.rb
@@ -54,6 +54,19 @@ def test_should_invoke_the_block_if_a_file_has_changed
     assert_equal 1, i
   end
 
+  def test_should_cache_updated_result_until_flushed
+    i = 0
+    checker = ActiveSupport::FileUpdateChecker.new(FILES, true){ i += 1 }
+    assert !checker.updated?
+
+    sleep(1)
+    FileUtils.touch(FILES)
+
+    assert checker.updated?
+    assert checker.execute_if_updated
+    assert !checker.updated?
+  end
+
   def test_should_invoke_the_block_if_a_watched_dir_changed_its_glob
     i = 0
     checker = ActiveSupport::FileUpdateChecker.new([{"tmp_watcher" => [:txt]}], true){ i += 1 }
diff --git a/railties/CHANGELOG.md b/railties/CHANGELOG.md
index 2841996b567b7..a88f443517eb0 100644
--- a/railties/CHANGELOG.md
+++ b/railties/CHANGELOG.md
@@ -1,9 +1,8 @@
 ## Rails 3.2.0 (unreleased) ##
 
-*   New applications get a flag
-    `config.active_record.auto_explain_threshold_in_seconds` in the environments
-    configuration files. With a value of 0.5 in development.rb, and commented
-    out in production.rb. No mention in test.rb. *fxn*
+*   Speed up development by only reloading classes if dependencies files changed. This can be turned off by setting `config.reload_classes_only_on_change` to false. *José Valim*
+
+*   New applications get a flag `config.active_record.auto_explain_threshold_in_seconds` in the environments configuration files. With a value of 0.5 in development.rb, and commented out in production.rb. No mention in test.rb. *fxn*
 
 *   Add DebugExceptions middleware which contains features extracted from ShowExceptions middleware *José Valim*
 
diff --git a/railties/guides/source/configuring.textile b/railties/guides/source/configuring.textile
index 8e65dbccbb9c7..8cf88cf71f294 100644
--- a/railties/guides/source/configuring.textile
+++ b/railties/guides/source/configuring.textile
@@ -98,6 +98,8 @@ NOTE. The +config.asset_path+ configuration is ignored if the asset pipeline is
 
 * +config.preload_frameworks+ enables or disables preloading all frameworks at startup. Enabled by +config.threadsafe!+. Defaults to +nil+, so is disabled.
 
+* +config.reload_classes_only_on_change+ enables or disables reloading of classes only when tracked files change. By default tracks everything on autoload paths and is set to true.
+
 * +config.reload_plugins+ enables or disables plugin reloading. Defaults to false.
 
 * +config.secret_token+ used for specifying a key which allows sessions for the application to be verified against a known secure key to prevent tampering. Applications get +config.secret_token+ initialized to a random key in +config/initializers/secret_token.rb+.
diff --git a/railties/lib/rails/application.rb b/railties/lib/rails/application.rb
index acbfd7078ba10..0b8eac8a8b06d 100644
--- a/railties/lib/rails/application.rb
+++ b/railties/lib/rails/application.rb
@@ -71,12 +71,14 @@ def inherited(base)
 
     attr_accessor :assets, :sandbox
     alias_method :sandbox?, :sandbox
+    attr_reader :reloaders
 
     delegate :default_url_options, :default_url_options=, :to => :routes
 
     def initialize
       super
       @initialized = false
+      @reloaders   = []
     end
 
     # This method is called just after an application inherits from Rails::Application,
@@ -119,6 +121,7 @@ def set_routes_reloader_hook
       reloader = routes_reloader
       hook = lambda { reloader.execute_if_updated }
       hook.call
+      self.reloaders << reloader
       ActionDispatch::Reloader.to_prepare(&hook)
     end
 
@@ -126,10 +129,35 @@ def set_routes_reloader_hook
     # A plugin may override this if they desire to provide a more exquisite app reloading.
     # :api: plugin
     def set_dependencies_hook
-      ActionDispatch::Reloader.to_cleanup do
+      callback = lambda do
         ActiveSupport::DescendantsTracker.clear
         ActiveSupport::Dependencies.clear
       end
+
+      if config.reload_classes_only_on_change
+        reloader = ActiveSupport::FileUpdateChecker.new(watchable_args, true, &callback)
+        self.reloaders << reloader
+        # We need to set a to_prepare callback regardless of the reloader result, i.e.
+        # models should be reloaded if any of the reloaders (i18n, routes) were updated.
+        ActionDispatch::Reloader.to_prepare(:prepend => true, &callback)
+      else
+        ActionDispatch::Reloader.to_cleanup(&callback)
+      end
+    end
+
+    # Returns an array of file paths appended with a hash of directories-extensions
+    # suitable for ActiveSupport::FileUpdateChecker API.
+    def watchable_args
+      files = []
+      files.concat config.watchable_files
+
+      dirs = {}
+      dirs.merge! config.watchable_dirs
+      ActiveSupport::Dependencies.autoload_paths.each do |path|
+        dirs[path.to_s] = [:rb]
+      end
+
+      files << dirs
     end
 
     # Initialize the application passing the given group. By default, the
@@ -223,6 +251,10 @@ def helpers_paths #:nodoc:
 
     alias :build_middleware_stack :app
 
+    def reload_dependencies?
+      config.reload_classes_only_on_change != true || reloaders.map(&:updated?).any?
+    end
+
     def default_middleware_stack
       ActionDispatch::MiddlewareStack.new.tap do |middleware|
         if rack_cache = config.action_controller.perform_caching && config.action_dispatch.rack_cache
@@ -252,7 +284,11 @@ def default_middleware_stack
           middleware.use ::Rack::Sendfile, config.action_dispatch.x_sendfile_header
         end
 
-        middleware.use ::ActionDispatch::Reloader unless config.cache_classes
+        unless config.cache_classes
+          app = self
+          middleware.use ::ActionDispatch::Reloader, lambda { app.reload_dependencies? }
+        end
+
         middleware.use ::ActionDispatch::Callbacks
         middleware.use ::ActionDispatch::Cookies
 
diff --git a/railties/lib/rails/application/configuration.rb b/railties/lib/rails/application/configuration.rb
index 4b2afe3a28df6..39d66ecc31260 100644
--- a/railties/lib/rails/application/configuration.rb
+++ b/railties/lib/rails/application/configuration.rb
@@ -7,11 +7,11 @@ class Application
     class Configuration < ::Rails::Engine::Configuration
       attr_accessor :allow_concurrency, :asset_host, :asset_path, :assets,
                     :cache_classes, :cache_store, :consider_all_requests_local,
-                    :dependency_loading, :filter_parameters,
-                    :force_ssl, :helpers_paths, :logger, :log_tags, :preload_frameworks,
-                    :relative_url_root, :reload_plugins, :secret_token, :serve_static_assets,
-                    :ssl_options, :static_cache_control, :session_options,
-                    :time_zone, :whiny_nils, :railties_order, :all_initializers
+                    :dependency_loading, :filter_parameters, :force_ssl, :helpers_paths,
+                    :initializers_paths, :logger, :log_tags, :preload_frameworks,
+                    :railties_order, :relative_url_root, :reload_plugins, :secret_token,
+                    :serve_static_assets, :ssl_options, :static_cache_control, :session_options,
+                    :time_zone, :reload_classes_only_on_change, :whiny_nils
 
       attr_writer :log_level
       attr_reader :encoding
@@ -19,25 +19,26 @@ class Configuration < ::Rails::Engine::Configuration
       def initialize(*)
         super
         self.encoding = "utf-8"
-        @allow_concurrency           = false
-        @consider_all_requests_local = false
-        @filter_parameters           = []
-        @helpers_paths               = []
-        @dependency_loading          = true
-        @serve_static_assets         = true
-        @static_cache_control        = nil
-        @force_ssl                   = false
-        @ssl_options                 = {}
-        @session_store               = :cookie_store
-        @session_options             = {}
-        @time_zone                   = "UTC"
-        @log_level                   = nil
-        @middleware                  = app_middleware
-        @generators                  = app_generators
-        @cache_store                 = [ :file_store, "#{root}/tmp/cache/" ]
-        @railties_order              = [:all]
-        @all_initializers            = []
-        @relative_url_root           = ENV["RAILS_RELATIVE_URL_ROOT"]
+        @allow_concurrency             = false
+        @consider_all_requests_local   = false
+        @filter_parameters             = []
+        @helpers_paths                 = []
+        @dependency_loading            = true
+        @serve_static_assets           = true
+        @static_cache_control          = nil
+        @force_ssl                     = false
+        @ssl_options                   = {}
+        @session_store                 = :cookie_store
+        @session_options               = {}
+        @time_zone                     = "UTC"
+        @log_level                     = nil
+        @middleware                    = app_middleware
+        @generators                    = app_generators
+        @cache_store                   = [ :file_store, "#{root}/tmp/cache/" ]
+        @railties_order                = [:all]
+        @initializers_paths            = []
+        @relative_url_root             = ENV["RAILS_RELATIVE_URL_ROOT"]
+        @reload_classes_only_on_change = true
 
         @assets = ActiveSupport::OrderedOptions.new
         @assets.enabled                  = false
diff --git a/railties/lib/rails/application/finisher.rb b/railties/lib/rails/application/finisher.rb
index 17e7aa0f28fc8..e000f6ef3ac2f 100644
--- a/railties/lib/rails/application/finisher.rb
+++ b/railties/lib/rails/application/finisher.rb
@@ -5,7 +5,7 @@ module Finisher
       $rails_rake_task = nil
 
       initializer :load_config_initializers do
-        config.all_initializers.each { |init| load(init) }
+        config.initializers_paths.each { |init| load(init) }
       end
 
       initializer :add_generator_templates do
@@ -64,18 +64,18 @@ module Finisher
         ActiveSupport.run_load_hooks(:after_initialize, self)
       end
 
-      # Set app reload just after the finisher hook to ensure
-      # paths added in the hook are still loaded.
-      initializer :set_dependencies_hook, :group => :all do |app|
-        app.set_dependencies_hook
-      end
-
       # Set app reload just after the finisher hook to ensure
       # routes added in the hook are still loaded.
       initializer :set_routes_reloader_hook do |app|
         app.set_routes_reloader_hook
       end
 
+      # Set app reload just after the finisher hook to ensure
+      # paths added in the hook are still loaded.
+      initializer :set_dependencies_hook, :group => :all do |app|
+        app.set_dependencies_hook
+      end
+
       # Disable dependency loading during request cycle
       initializer :disable_dependency_loading do
         if config.cache_classes && !config.dependency_loading
diff --git a/railties/lib/rails/application/routes_reloader.rb b/railties/lib/rails/application/routes_reloader.rb
index c1f435a3eef49..460b84dfd9565 100644
--- a/railties/lib/rails/application/routes_reloader.rb
+++ b/railties/lib/rails/application/routes_reloader.rb
@@ -1,21 +1,17 @@
+require "active_support/core_ext/module/delegation"
+
 module Rails
   class Application
     class RoutesReloader
       attr_reader :route_sets
 
+      delegate :paths, :execute_if_updated, :updated?, :to => :@updater
+
       def initialize(updater=ActiveSupport::FileUpdateChecker)
         @updater    = updater.new([]) { reload! }
         @route_sets = []
       end
 
-      def paths
-        @updater.paths
-      end
-
-      def execute_if_updated
-        @updater.execute_if_updated
-      end
-
       def reload!
         clear!
         load_paths
diff --git a/railties/lib/rails/engine.rb b/railties/lib/rails/engine.rb
index 8ebe1f48a5f56..86efc7332cb29 100644
--- a/railties/lib/rails/engine.rb
+++ b/railties/lib/rails/engine.rb
@@ -584,7 +584,7 @@ def load_seed
     end
 
     initializer :append_config_initializers do |app|
-      app.config.all_initializers.concat config.paths["config/initializers"].existent.sort
+      app.config.initializers_paths.concat config.paths["config/initializers"].existent.sort
     end
 
     initializer :engines_blank_point do
diff --git a/railties/lib/rails/railtie/configuration.rb b/railties/lib/rails/railtie/configuration.rb
index f888684117e5e..cf9e4ad5005ae 100644
--- a/railties/lib/rails/railtie/configuration.rb
+++ b/railties/lib/rails/railtie/configuration.rb
@@ -7,6 +7,18 @@ def initialize
         @@options ||= {}
       end
 
+      # Add files that should be watched for change.
+      def watchable_files
+        @@watchable_files ||= []
+      end
+
+      # Add directories that should be watched for change.
+      # The key of the hashes should be directories and the values should
+      # be an array of extensions to match in each directory.
+      def watchable_dirs
+        @@watchable_dirs ||= {}
+      end
+
       # This allows you to modify the application's middlewares from Engines.
       #
       # All operations you run on the app_middleware will be replayed on the
diff --git a/railties/test/application/console_test.rb b/railties/test/application/console_test.rb
index 2073c780bfee5..6f9d8d57b1963 100644
--- a/railties/test/application/console_test.rb
+++ b/railties/test/application/console_test.rb
@@ -61,7 +61,8 @@ class User
 
     load_environment
     assert User.new.respond_to?(:name)
-    assert !User.new.respond_to?(:age)
+
+    sleep(1)
 
     app_file "app/models/user.rb", <<-MODEL
       class User
diff --git a/railties/test/application/loading_test.rb b/railties/test/application/loading_test.rb
index 47c6fd5c6e378..c4908915dc11d 100644
--- a/railties/test/application/loading_test.rb
+++ b/railties/test/application/loading_test.rb
@@ -66,6 +66,7 @@ class User < ActiveRecord::Base
   def test_descendants_are_cleaned_on_each_request_without_cache_classes
     add_to_config <<-RUBY
       config.cache_classes = false
+      config.reload_classes_only_on_change = false
     RUBY
 
     app_file "app/models/post.rb", <<-MODEL