diff --git a/src/rebar_erlc_compiler.erl b/src/rebar_erlc_compiler.erl
index 6f7e3a3f..ef3e7fc3 100644
--- a/src/rebar_erlc_compiler.erl
+++ b/src/rebar_erlc_compiler.erl
@@ -129,9 +129,11 @@ doterl_compile(Config, OutDir, MoreSources) ->
     %% contain erlang source. This might be used, for example, should
     %% eunit tests be separated from the core application source.
     SrcDirs = rebar_utils:src_dirs(proplists:append_values(src_dirs, ErlOpts)),
-    RestErls  = [Source || Source <- gather_src(SrcDirs, []) ++ MoreSources,
+    RestErls  = [Source || Source <- gather_src(SrcDirs, [], erl) ++ MoreSources,
                            not lists:member(Source, FirstErls)],
 
+    Cores  = [Source || Source <- gather_src(SrcDirs, [], core) ++ MoreSources],
+
     %% Split RestErls so that parse_transforms and behaviours are instead added
     %% to erl_first_files, parse transforms first.
     %% This should probably be somewhat combined with inspect_epp
@@ -159,6 +161,10 @@ doterl_compile(Config, OutDir, MoreSources) ->
                             fun(S, C) ->
                                     internal_erl_compile(S, C, OutDir, ErlOpts)
                             end),
+    rebar_base_compiler:run(Config, [], Cores,
+                            fun(S, C) ->
+                                    internal_core_compile(S, C, OutDir, ErlOpts)
+                            end),
     true = code:set_path(CurrPath),
     ok.
 
@@ -177,7 +183,8 @@ include_path(Source, Config) ->
 -spec inspect(Source::file:filename(),
               IncludePath::[file:filename(), ...]) -> {string(), [string()]}.
 inspect(Source, IncludePath) ->
-    ModuleDefault = filename:basename(Source, ".erl"),
+    Extension = filename:extension(Source),
+    ModuleDefault = filename:basename(Source, Extension),
     case epp:open(Source, IncludePath) of
         {ok, Epp} ->
             inspect_epp(Epp, Source, ModuleDefault, []);
@@ -229,6 +236,37 @@ needs_compile(Source, Target, Hrls) ->
     lists:any(fun(I) -> TargetLastMod < filelib:last_modified(I) end,
               [Source] ++ Hrls).
 
+-spec internal_core_compile(Source::file:filename(),
+                            Config::rebar_config:config(),
+                            Outdir::file:filename(),
+                            ErlOpts::list()) -> 'ok' | 'skipped'.
+internal_core_compile(Source, Config, Outdir, ErlOpts) ->
+    %% Determine the target name and includes list by inspecting the source file
+    {Module, Hrls} = inspect(Source, include_path(Source, Config)),
+
+    %% Construct the target filename
+    Target = filename:join([Outdir,Module]) ++ ".beam",
+    ok = filelib:ensure_dir(Target),
+
+    %% If the file needs compilation, based on last mod date of includes or
+    %% the target
+    case needs_compile(Source, Target, Hrls) of
+        true ->
+            Opts = [from_core, {outdir, filename:dirname(Target)}] ++
+                ErlOpts ++ [{i, "include"}, return],
+            case compile:file(Source, Opts) of
+                {ok, _Mod} ->
+                    ok;
+                {ok, _Mod, Ws} ->
+                    rebar_base_compiler:ok_tuple(Source, Ws);
+                {error, Es, Ws} ->
+                    rebar_base_compiler:error_tuple(Source, Es, Ws, Opts)
+            end;
+        false ->
+            skipped
+    end.
+
+
 -spec internal_erl_compile(Source::file:filename(),
                            Config::rebar_config:config(),
                            Outdir::file:filename(),
@@ -306,10 +344,14 @@ compile_xrl_yrl(Source, Target, Opts, Mod) ->
             skipped
     end.
 
-gather_src([], Srcs) ->
+gather_src([], Srcs, _Type) ->
     Srcs;
-gather_src([Dir|Rest], Srcs) ->
-    gather_src(Rest, Srcs ++ rebar_utils:find_files(Dir, ".*\\.erl\$")).
+gather_src([Dir|Rest], Srcs, erl) ->
+    Erls = rebar_utils:find_files(Dir, ".*\\.erl\$"),
+    gather_src(Rest, Srcs ++ Erls, erl);
+gather_src([Dir|Rest], Srcs, core) ->
+    Cores = rebar_utils:find_files(Dir, ".*\\.core\$"),
+    gather_src(Rest, Srcs ++ Cores, core).
 
 
 -spec dirs(Dir::file:filename()) -> [file:filename()].
diff --git a/test/rebar_eunit_tests.erl b/test/rebar_eunit_tests.erl
index 72fb3ea7..b0014c53 100644
--- a/test/rebar_eunit_tests.erl
+++ b/test/rebar_eunit_tests.erl
@@ -46,17 +46,18 @@
 
 eunit_test_() ->
     {"Ensure EUnit runs with tests in a 'test' dir and no defined suite",
-     setup, fun() -> setup_basic_project(), rebar("-v eunit") end,
+     setup, fun() -> setup_core_project(), rebar("-v eunit") end,
      fun teardown/1,
      fun(RebarOut) ->
              [{"Tests in 'test' directory are found and run",
                ?_assert(string:str(RebarOut, "myapp_mymod_tests:") =/= 0)},
+              {"", fun() -> ?assertEqual(RebarOut, false) end},
 
               {"Tests in 'src' directory are found and run",
                ?_assert(string:str(RebarOut, "myapp_mymod:") =/= 0)},
 
               {"Tests are only run once",
-               ?_assert(string:str(RebarOut, "All 2 tests passed") =/= 0)}]
+               ?_assert(string:str(RebarOut, "All 3 tests passed") =/= 0)}]
      end}.
 
 cover_test_() ->
@@ -141,10 +142,27 @@ basic_setup_test_() ->
                          ["test/myapp_mymod_tests.erl",
                           "src/myapp_mymod.erl"])}.
 
+basic_core_test_() ->
+    {"Create a core project with a 'test' directory, a test, and a module",
+     setup, fun setup_core_project/0, fun teardown/1,
+
+     %% Test the setup function
+     assert_dirs_in("Core Project",
+                    ["src", "ebin", "test"]) ++
+         assert_files_in("Core Project",
+                         ["src/myapp_mycoremod.core"])}.
+
 %% ====================================================================
 %% Setup and Teardown
 %% ====================================================================
 
+-define(myapp_mycoremod,
+        ["module 'myapp_mycoremod' [ 'myfunc'/0 ] attributes [ ]\n",
+         "\n",
+         "'myfunc'/0 = fun() ->\n",
+         "  []\n",
+         "end"]).
+
 -define(myapp_mymod,
         ["-module(myapp_mymod).\n",
          "-export([myfunc/0]).\n",
@@ -156,7 +174,8 @@ basic_setup_test_() ->
         ["-module(myapp_mymod_tests).\n",
          "-compile([export_all]).\n",
          "-include_lib(\"eunit/include/eunit.hrl\").\n",
-         "myfunc_test() -> ?assertMatch(ok, myapp_mymod:myfunc()).\n"]).
+         "myfunc_test() -> ?assertMatch(ok, myapp_mymod:myfunc()).\n",
+         "myfunc_core_test() -> ?assertMatch([], myapp_mycoremod:myfunc()).\n"]).
 
 -define(mysuite,
         ["-module(mysuite).\n",
@@ -186,6 +205,10 @@ setup_basic_project() ->
     ok = file:write_file("test/myapp_mymod_tests.erl", ?myapp_mymod_tests),
     ok = file:write_file("src/myapp_mymod.erl", ?myapp_mymod).
 
+setup_core_project() ->
+    setup_basic_project(),
+    ok = file:write_file("src/myapp_mycoremod.core", ?myapp_mycoremod).
+
 setup_cover_project() ->
     setup_basic_project(),
     ok = file:write_file("rebar.config", "{cover_enabled, true}.\n").