diff --git a/lib/compass/commands/create_project.rb b/lib/compass/commands/create_project.rb
index 76757b8d..065abc8d 100644
--- a/lib/compass/commands/create_project.rb
+++ b/lib/compass/commands/create_project.rb
@@ -9,21 +9,29 @@ module Compass
 
       include Compass::Installers
 
+      attr_accessor :installer
+
       def initialize(working_directory, options)
         super(working_directory, options)
+        installer_args = [project_template_directory, project_directory, self.options]
+        @installer = case options[:project_type]
+        when :stand_alone
+          StandAloneInstaller.new *installer_args
+        when :rails
+          RailsInstaller.new *installer_args
+        else
+          raise "Unknown project type: #{project_type}"
+        end
       end
       
       # all commands must implement perform
       def perform
+        installer.init
         installer.run(:skip_finalization => true)
         UpdateProject.new(working_directory, options).perform if installer.compilation_required?
         installer.finalize(:create => true)
       end
 
-      def installer
-        @installer ||= StandAloneInstaller.new(project_template_directory, project_directory, options)
-      end
-
       def project_template_directory
         File.join(framework.templates_directory, "project")
       end
diff --git a/lib/compass/commands/install_rails.rb b/lib/compass/commands/install_rails.rb
deleted file mode 100644
index 6b4da241..00000000
--- a/lib/compass/commands/install_rails.rb
+++ /dev/null
@@ -1,97 +0,0 @@
-require File.join(File.dirname(__FILE__), 'base')
-require File.join(File.dirname(__FILE__), 'create_project')
-
-module Compass
-  module Commands
-    class InstallRails < CreateProject
-      def initialize(*args)
-        super        
-      end
-
-      def perform
-        set_install_location
-        set_output_location
-        directory options[:stylesheets_location]
-        framework_templates.each do |t|
-          template "project/#{t}", "#{options[:stylesheets_location]}/#{t}", options
-        end
-        write_file 'config/initializers/compass.rb', initializer_contents
-        if has_application_layout?
-          next_steps
-        else
-          write_file 'app/views/layouts/application.html.haml', application_layout_contents
-        end
-      end
-      
-      def initializer_contents
-        %Q{require 'compass'
-# If you have any compass plugins, require them here.
-Sass::Plugin.options[:template_location] = {
-  "\#{RAILS_ROOT}#{File::SEPARATOR}#{options[:stylesheets_location]}" => "\#{RAILS_ROOT}#{File::SEPARATOR}#{options[:css_location]}"
-}
-Compass::Frameworks::ALL.each do |framework|
-  Sass::Plugin.options[:template_location][framework.stylesheets_directory] = "\#{RAILS_ROOT}#{File::SEPARATOR}#{options[:css_location]}"
-end
-}
-      end
-
-      def application_layout_contents
-        %Q{!!! XML
-!!!
-%html{:xmlns => "http://www.w3.org/1999/xhtml", "xml:lang" => "en", :lang => "en"}
-  %head
-    %meta{'http-equiv' => "content-type", :content => "text/html;charset=UTF-8"}
-    %title= @browser_title || 'Default Browser Title'
-    = stylesheet_link_tag '#{stylesheet_prefix}screen.css', :media => 'screen, projection'
-    = stylesheet_link_tag '#{stylesheet_prefix}print.css', :media => 'print'
-    /[if IE]
-      = stylesheet_link_tag '#{stylesheet_prefix}ie.css', :media => 'screen, projection'
-  %body
-    %h1 Welcome to Compass
-    = yield
-}
-      end
-
-      def next_steps
-        puts <<NEXTSTEPS
-
-Congratulations! Your project has been configured to use Compass.
-Next add these lines to the head of your application.html.haml:
-
-%head 
-  = stylesheet_link_tag '#{stylesheet_prefix}screen.css', :media => 'screen, projection'
-  = stylesheet_link_tag '#{stylesheet_prefix}print.css', :media => 'print'
-  /[if IE]
-    = stylesheet_link_tag '#{stylesheet_prefix}ie.css', :media => 'screen, projection'
-
-(you are using haml, aren't you?)
-NEXTSTEPS
-      end
-
-      def has_application_layout?
-        File.exists?(projectize('app/views/layouts/application.rhtml')) ||
-        File.exists?(projectize('app/views/layouts/application.html.erb')) ||
-        File.exists?(projectize('app/views/layouts/application.html.haml'))
-      end
-
-      def stylesheet_prefix
-        if options[:css_location].length >= 19
-          "#{options[:css_location][19..-1]}/"
-        else
-          nil
-        end
-      end
-
-      def set_install_location
-        print "Compass recommends that you keep your stylesheets in app/stylesheets/ instead of the Sass default location of public/stylesheets/sass/.\nIs this OK? (Y/n) "
-        answer = gets
-        self.options[:stylesheets_location] = separate(answer.downcase[0] == ?n ? 'public/stylesheets/sass' : 'app/stylesheets')
-      end
-      def set_output_location
-        print "\nCompass recommends that you keep your compiled css in public/stylesheets/compiled/ instead the Sass default of public/stylesheets/.\nHowever, if you're exclusively using Sass, then public/stylesheets/ is recommended.\nEmit compiled stylesheets to public/stylesheets/compiled? (Y/n) "
-        answer = gets
-        self.options[:css_location] = separate(answer.downcase[0] == ?n ? 'public/stylesheets' : 'public/stylesheets/compiled')
-      end
-    end
-  end
-end
diff --git a/lib/compass/exec.rb b/lib/compass/exec.rb
index 2350dd2b..e9b77d59 100644
--- a/lib/compass/exec.rb
+++ b/lib/compass/exec.rb
@@ -79,6 +79,7 @@ module Compass
         self.options[:command] ||= self.options[:project_name] ? :create_project : :update_project
         self.options[:environment] ||= :production
         self.options[:framework] ||= :compass
+        self.options[:project_type] ||= :stand_alone
       end
 
       def trim_trailing_separator(path)
@@ -133,8 +134,8 @@ END
           require library
         end
         
-        opts.on('--rails', "Install compass into your Ruby on Rails project found in the current directory.") do
-          self.options[:command] = :install_rails
+        opts.on('--rails', "Sets the project type to a rails project.") do
+          self.options[:project_type] = :rails
         end
 
         opts.on('-q', '--quiet', :NONE, 'Quiet mode.') do
diff --git a/lib/compass/installers.rb b/lib/compass/installers.rb
index 01d5216f..3a86dff8 100644
--- a/lib/compass/installers.rb
+++ b/lib/compass/installers.rb
@@ -13,4 +13,5 @@ end
 require File.join(File.dirname(__FILE__), 'installers', 'manifest')
 require File.join(File.dirname(__FILE__), 'installers', 'base')
 require File.join(File.dirname(__FILE__), 'installers', 'stand_alone')
+require File.join(File.dirname(__FILE__), 'installers', 'rails')
 
diff --git a/lib/compass/installers/base.rb b/lib/compass/installers/base.rb
index 86867b0b..f30be0b5 100644
--- a/lib/compass/installers/base.rb
+++ b/lib/compass/installers/base.rb
@@ -15,17 +15,21 @@ module Compass
         @options = options
         @manifest = Manifest.new(manifest_file)
         configure_option_with_default :logger
+        configure
       end
 
       def manifest_file
         @manifest_file ||= File.join(template_path, "manifest.rb")
       end
 
+      # Initializes the project to work with compass
+      def init
+      end
+
       # Runs the installer.
-      # Every installer must conform to the installation strategy of configure, prepare, install, and then finalize.
+      # Every installer must conform to the installation strategy of prepare, install, and then finalize.
       # A default implementation is provided for each step.
       def run(options = {})
-        configure
         prepare
         install
         finalize unless options[:skip_finalization]
@@ -36,9 +40,13 @@ module Compass
       # It can be overridden it or augmented for reading config files,
       # prompting the user for more information, etc.
       def configure
-        [:css_dir, :sass_dir, :images_dir, :javascripts_dir].each do |opt|
-          configure_option_with_default opt
+        unless @configured
+          [:css_dir, :sass_dir, :images_dir, :javascripts_dir].each do |opt|
+            configure_option_with_default opt
+          end
         end
+      ensure
+        @configured = true
       end
 
       # The default prepare method -- it is a no-op.
diff --git a/lib/compass/installers/rails.rb b/lib/compass/installers/rails.rb
new file mode 100644
index 00000000..f896aa65
--- /dev/null
+++ b/lib/compass/installers/rails.rb
@@ -0,0 +1,117 @@
+module Compass
+  module Installers
+    
+    class RailsInstaller < Base
+
+      def configure
+        configuration_file = targetize('config/initializers/compass.rb')
+        if File.exists?(configuration_file)
+          open(configuration_file) do |config|
+            eval(config.read, nil, configuration_file)
+          end
+        end
+      end
+
+      def init
+        set_sass_dir unless sass_dir
+        set_css_dir unless css_dir
+        directory css_dir
+        directory sass_dir
+        write_file 'config/initializers/compass.rb', initializer_contents
+      end
+
+      def prepare
+      end
+
+      def finalize(options = {})
+        if options[:create]
+          puts <<-NEXTSTEPS
+
+Congratulations! Your rails project has been configured to use Compass.
+Sass will automatically compile your stylesheets during the next
+page request and keep them up to date when they change.
+Make sure you restart your server!
+
+Next add these lines to the head of your layouts:
+
+NEXTSTEPS
+        end
+        puts stylesheet_links
+        puts "\n(You are using haml, aren't you?)"
+      end
+
+      def sass_dir
+        Compass.configuration.sass_dir
+      end
+
+      def css_dir
+        Compass.configuration.css_dir
+      end
+
+      def images_dir
+        separate "public/images"
+      end
+
+      def javascripts_dir
+        separate "public/javascripts"
+      end
+
+      def set_sass_dir
+        recommended_location = separate('app/stylesheets')
+        default_location = separate('public/stylesheets/sass')
+        print %Q{Compass recommends that you keep your stylesheets in #{recommended_location}
+instead of the Sass default location of #{default_location}.
+Is this OK? (Y/n) }
+        answer = gets.downcase[0]
+        Compass.configuration.sass_dir = answer == ?n ? default_location : recommended_location
+      end
+
+      def set_css_dir
+        recommended_location = separate("public/stylesheets/compiled")
+        default_location = separate("public/stylesheets")
+        puts
+        print %Q{Compass recommends that you keep your compiled css in #{recommended_location}/
+instead the Sass default of #{default_location}/.
+However, if you're exclusively using Sass, then #{default_location}/ is recommended.
+Emit compiled stylesheets to #{recommended_location}/? (Y/n) }
+        answer = gets.downcase[0]
+        Compass.configuration.css_dir = answer == ?n ? default_location : recommended_location
+      end
+
+      def initializer_contents
+        %Q{require 'compass'
+# If you have any compass plugins, require them here.
+Compass.configuration do |config|
+  config.project_path = RAILS_ROOT
+  config.sass_dir = "#{sass_dir}"
+  config.css_dir = "#{css_dir}"
+end
+Compass.configure_sass_plugin!
+}
+      end
+
+      def stylesheet_prefix
+        if css_dir.length >= 19
+          "#{css_dir[19..-1]}/"
+        else
+          nil
+        end
+      end
+
+      def stylesheet_links
+        html = "%head\n"
+        manifest.each_stylesheet do |stylesheet|
+          ss_line = "  = stylesheet_link_tag '#{stylesheet_prefix}#{stylesheet.to.sub(/\.sass$/,'.css')}'"
+          if stylesheet.options[:media]
+            ss_line += ", :media => '#{stylesheet.options[:media]}'"
+          end
+          if stylesheet.options[:ie]
+            ss_line = "  /[if IE]\n  " + ss_line
+          end
+          html << ss_line + "\n"
+        end
+        html
+      end
+    end
+  end
+end
diff --git a/lib/compass/installers/stand_alone.rb b/lib/compass/installers/stand_alone.rb
index 52ac28cc..ff333e83 100644
--- a/lib/compass/installers/stand_alone.rb
+++ b/lib/compass/installers/stand_alone.rb
@@ -12,10 +12,13 @@ module Compass
         super
       end
 
-      def prepare
+      def init
         directory ""
         directory css_dir
         directory sass_dir
+      end
+
+      def prepare
         directory images_dir if manifest.has_image?
         directory javascripts_dir if manifest.has_javascript?
       end
diff --git a/test/command_line_test.rb b/test/command_line_test.rb
index 30176875..c44a5deb 100644
--- a/test/command_line_test.rb
+++ b/test/command_line_test.rb
@@ -47,15 +47,13 @@ class CommandLineTest < Test::Unit::TestCase
     within_tmp_directory do
       generate_rails_app("compass_rails")
       Dir.chdir "compass_rails" do
-        compass "--rails" do |responder|
+        compass("--rails", ".") do |responder|
           responder.respond_to "Is this OK? (Y/n) ", :with => "Y"
-          responder.respond_to "Emit compiled stylesheets to public/stylesheets/compiled? (Y/n) ", :with => "Y"
+          responder.respond_to "Emit compiled stylesheets to public/stylesheets/compiled/? (Y/n) ", :with => "Y"
         end
         # puts @last_result
-        assert_action_performed :create, "app/stylesheets/screen.sass"
-        assert_action_performed :create, "config/initializers/compass.rb"
-        assert_action_performed :create, "app/views/layouts/application.html.haml"
-        assert_action_performed :create, "config/initializers/compass.rb"
+        assert_action_performed :create, "./app/stylesheets/screen.sass"
+        assert_action_performed :create, "./config/initializers/compass.rb"
       end
     end
   rescue LoadError