Using latest sass-rails and rails from edge 5.minutes.ago: ``` gem 'rake', '0.8.7' gem 'rails', :git => 'git://github.com/rails/rails.git', :branch=>'3-1-stable' gem 'sprockets' gem 'jquery-rails' group :assets do gem 'sass-rails', :git => 'git://github.com/rails/sass-rails.git', :branch=>'3-1-stable' gem 'coffee-rails', '~> 3.1.0' gem 'uglifier' gem 'compass', '~> 0.12.alpha' gem 'compass-susy-plugin', :require => 'susy' # http://susy.oddbird.net/tutorial/ gem 'oily_png' # for faster compass sprite PNG compilation end ``` With latest rails 3-1-stable commit by santiago, image_tag in erb views now works fine, renders /assets/ instead of /images again as in 3.1.0. But "image-tag('image.png')" in sass and scss still returns /images/image.png instead of /assets/image.png.