diff --git a/features/command_line.feature b/features/command_line.feature
index 6aa615c7..800c2253 100644
--- a/features/command_line.feature
+++ b/features/command_line.feature
@@ -77,9 +77,8 @@ Feature: Command Line
   Scenario: Initializing a rails project
     Given I'm in a newly created rails project: my_rails_project
     When I initialize a project using: compass init rails --sass-dir app/stylesheets --css-dir public/stylesheets/compiled
-    Then a config file config/compass.config is reported created
-    Then a config file config/compass.config is created
-    And a ruby file config/compass.config is created
+    Then a config file config/compass.rb is reported created
+    Then a config file config/compass.rb is created
     And a sass file config/initializers/compass.rb is created
     And a sass file app/stylesheets/screen.sass is created
     And a sass file app/stylesheets/print.sass is created
diff --git a/lib/compass/app_integration/rails/installer.rb b/lib/compass/app_integration/rails/installer.rb
index 863ad3ff..ece81ea2 100644
--- a/lib/compass/app_integration/rails/installer.rb
+++ b/lib/compass/app_integration/rails/installer.rb
@@ -22,8 +22,10 @@ module Compass
         end
 
         def write_configuration_files(config_file = nil)
-          config_file ||= targetize('config/compass.config')
+          config_file ||= targetize('config/compass.rb')
+          directory File.dirname(config_file)
           write_file config_file, config_contents
+          directory File.dirname(targetize('config/initializers/compass.rb'))
           write_file targetize('config/initializers/compass.rb'), initializer_contents
         end
 
diff --git a/lib/compass/configuration/helpers.rb b/lib/compass/configuration/helpers.rb
index 18bd60ac..edcfb40c 100644
--- a/lib/compass/configuration/helpers.rb
+++ b/lib/compass/configuration/helpers.rb
@@ -76,7 +76,7 @@ module Compass
       end
 
       # TODO: Deprecate the src/config.rb location.
-      KNOWN_CONFIG_LOCATIONS = [".compass/config.rb", "config/compass.config", "config.rb", "src/config.rb"]
+      KNOWN_CONFIG_LOCATIONS = ['config/compass.rb', ".compass/config.rb", "config/compass.config", "config.rb", "src/config.rb"]
 
       # Finds the configuration file, if it exists in a known location.
       def detect_configuration_file(project_path = nil)