diff --git a/.gitignore b/.gitignore
index 867d20b..abc26d1 100644
--- a/.gitignore
+++ b/.gitignore
@@ -6,3 +6,5 @@ target/*
 .project
 bin/*
 *~
+.idea/*
+resty.iml
\ No newline at end of file
diff --git a/src/main/java/us/monoid/web/AbstractResource.java b/src/main/java/us/monoid/web/AbstractResource.java
index d710fe8..475cbeb 100644
--- a/src/main/java/us/monoid/web/AbstractResource.java
+++ b/src/main/java/us/monoid/web/AbstractResource.java
@@ -8,6 +8,7 @@
 import java.util.List;
 import java.util.Map;
 import java.util.logging.Logger;
+import java.util.zip.GZIPInputStream;
 
 /**
  * Abstract base class for all resource handlers you want to use with Resty.
@@ -31,7 +32,12 @@ public AbstractResource(Option... options) {
 	void fill(URLConnection anUrlConnection) throws IOException {
 		urlConnection = anUrlConnection;
 		try {
-			inputStream = anUrlConnection.getInputStream();
+			if ("gzip".equals(anUrlConnection.getContentEncoding())) {
+				inputStream = new GZIPInputStream(anUrlConnection.getInputStream());
+			}
+			else {
+				inputStream = anUrlConnection.getInputStream();
+			}
 		} catch (IOException e) {
 			// Per http://docs.oracle.com/javase/1.5.0/docs/guide/net/http-keepalive.html
 			// (comparable documentation exists for later java versions)
@@ -39,7 +45,13 @@ void fill(URLConnection anUrlConnection) throws IOException {
 			// so that keep alive can keep doing its work
 			if (anUrlConnection instanceof HttpURLConnection) {
 				HttpURLConnection conn = (HttpURLConnection) anUrlConnection;
-				InputStream es = new BufferedInputStream(conn.getErrorStream());
+				InputStream es;
+				if ("gzip".equals(conn.getContentEncoding())) {
+					es = new BufferedInputStream(new GZIPInputStream(conn.getErrorStream()));
+				}
+				else {
+					es = new BufferedInputStream(conn.getErrorStream());
+				}
 
 				ByteArrayOutputStream baos = new ByteArrayOutputStream();
 				try {
diff --git a/src/test/java/compression/test/CompressionTest.java b/src/test/java/compression/test/CompressionTest.java
new file mode 100644
index 0000000..973dc02
--- /dev/null
+++ b/src/test/java/compression/test/CompressionTest.java
@@ -0,0 +1,31 @@
+package compression.test;
+
+import org.junit.Test;
+import us.monoid.web.Resty;
+
+import java.io.IOException;
+
+import static org.junit.Assert.assertTrue;
+
+/**
+ * Test that Resty deflates a compressed stream if gzip'd content is requested via the Accept-Encoding header
+ */
+public class CompressionTest {
+
+	@Test
+	public void testResponseDeflated() throws IOException {
+		// no compression
+		Resty r = new Resty();
+		String responseBody = r.text("http://www.whatsmyip.org/http-compression-test/").toString();
+		assertTrue("response body expected to contain message that NOT compressed",
+			responseBody.contains("No, Your Browser is Not Requesting Compressed Content"));
+
+		// with compression
+		r = new Resty();
+		r.withHeader("Accept-Encoding", "gzip");
+		responseBody = r.text("http://www.whatsmyip.org/http-compression-test/").toString();
+		assertTrue("response body expected to contain message that it WAS compressed",
+			responseBody.contains("Yes, Your Browser is Requesting Compressed Content"));
+	}
+
+}