diff --git a/src/demo-app/tooltip/tooltip-demo.html b/src/demo-app/tooltip/tooltip-demo.html
index 13031ea41301..5266f2eaeb3c 100644
--- a/src/demo-app/tooltip/tooltip-demo.html
+++ b/src/demo-app/tooltip/tooltip-demo.html
@@ -3,12 +3,12 @@ <h1>Tooltip Demo</h1>
 
   <p class="centered">
     <button #tooltip="mdTooltip"
-        md-raised-button
-        color="primary"
-        [mdTooltip]="message"
-        [mdTooltipPosition]="position"
-        [mdTooltipShowDelay]="showDelay"
-        [mdTooltipHideDelay]="hideDelay">
+            md-raised-button
+            color="primary"
+            [mdTooltip]="message"
+            [mdTooltipPosition]="position"
+            [mdTooltipShowDelay]="showDelay"
+            [mdTooltipHideDelay]="hideDelay">
       Mouse over to see the tooltip
     </button>
   </p>
diff --git a/src/demo-app/tooltip/tooltip-demo.ts b/src/demo-app/tooltip/tooltip-demo.ts
index 56046e7156c7..a18c5605a24d 100644
--- a/src/demo-app/tooltip/tooltip-demo.ts
+++ b/src/demo-app/tooltip/tooltip-demo.ts
@@ -12,5 +12,5 @@ export class TooltipDemo {
   position: TooltipPosition = 'below';
   message: string = 'Here is the tooltip';
   showDelay = 0;
-  hideDelay = 0;
+  hideDelay = 1000;
 }
diff --git a/src/lib/core/overlay/position/connected-position-strategy.spec.ts b/src/lib/core/overlay/position/connected-position-strategy.spec.ts
index e233c2d5cd01..c50217cd982e 100644
--- a/src/lib/core/overlay/position/connected-position-strategy.spec.ts
+++ b/src/lib/core/overlay/position/connected-position-strategy.spec.ts
@@ -3,6 +3,9 @@ import {ConnectedPositionStrategy} from './connected-position-strategy';
 import {ViewportRuler} from './viewport-ruler';
 import {OverlayPositionBuilder} from './overlay-position-builder';
 import {ConnectedOverlayPositionChange} from './connected-position';
+import {Scrollable} from '../scroll/scrollable';
+import {Subscription} from 'rxjs';
+import Spy = jasmine.Spy;
 
 
 // Default width and height of the overlay and origin panels throughout these tests.
@@ -14,415 +17,533 @@ const DEFAULT_WIDTH = 60;
 // for tests on CI (both SauceLabs and Browserstack).
 
 describe('ConnectedPositionStrategy', () => {
-  const ORIGIN_HEIGHT = DEFAULT_HEIGHT;
-  const ORIGIN_WIDTH = DEFAULT_WIDTH;
-  const OVERLAY_HEIGHT = DEFAULT_HEIGHT;
-  const OVERLAY_WIDTH = DEFAULT_WIDTH;
-
-  let originElement: HTMLElement;
-  let overlayElement: HTMLElement;
-  let overlayContainerElement: HTMLElement;
-  let strategy: ConnectedPositionStrategy;
-  let fakeElementRef: ElementRef;
-  let fakeViewportRuler: FakeViewportRuler;
-  let positionBuilder: OverlayPositionBuilder;
-
-  let originRect: ClientRect;
-  let originCenterX: number;
-  let originCenterY: number;
-
-  beforeEach(() => {
-    fakeViewportRuler = new FakeViewportRuler();
-
-    // The origin and overlay elements need to be in the document body in order to have geometry.
-    originElement = createPositionedBlockElement();
-    overlayContainerElement = createFixedElement();
-    overlayElement = createPositionedBlockElement();
-    document.body.appendChild(originElement);
-    document.body.appendChild(overlayContainerElement);
-    overlayContainerElement.appendChild(overlayElement);
-
-    fakeElementRef = new FakeElementRef(originElement);
-    positionBuilder = new OverlayPositionBuilder(new ViewportRuler());
-  });
 
-  afterEach(() => {
-    document.body.removeChild(originElement);
-    document.body.removeChild(overlayContainerElement);
+  describe('with origin on document body', () => {
+    const ORIGIN_HEIGHT = DEFAULT_HEIGHT;
+    const ORIGIN_WIDTH = DEFAULT_WIDTH;
+    const OVERLAY_HEIGHT = DEFAULT_HEIGHT;
+    const OVERLAY_WIDTH = DEFAULT_WIDTH;
 
-    // Reset the origin geometry after each test so we don't accidently keep state between tests.
-    originRect = null;
-    originCenterX = null;
-    originCenterY = null;
-  });
+    let originElement: HTMLElement;
+    let overlayElement: HTMLElement;
+    let overlayContainerElement: HTMLElement;
+    let strategy: ConnectedPositionStrategy;
+    let fakeElementRef: ElementRef;
+    let fakeViewportRuler: FakeViewportRuler;
+    let positionBuilder: OverlayPositionBuilder;
 
-  describe('when not near viewport edge, not scrolled', () => {
-    // Place the original element close to the center of the window.
-    // (1024 / 2, 768 / 2). It's not exact, since outerWidth/Height includes browser
-    // chrome, but it doesn't really matter for these tests.
-    const ORIGIN_LEFT = 500;
-    const ORIGIN_TOP = 350;
+    let originRect: ClientRect;
+    let originCenterX: number;
+    let originCenterY: number;
 
     beforeEach(() => {
-      originElement.style.left = `${ORIGIN_LEFT}px`;
-      originElement.style.top = `${ORIGIN_TOP}px`;
-
-      originRect = originElement.getBoundingClientRect();
-      originCenterX = originRect.left + (ORIGIN_WIDTH / 2);
-      originCenterY = originRect.top + (ORIGIN_HEIGHT / 2);
-    });
-
-    // Preconditions are set, now just run the full set of simple position tests.
-    runSimplePositionTests();
-  });
-
-  describe('when scrolled', () => {
-    // Place the original element decently far outside the unscrolled document (1024x768).
-    const ORIGIN_LEFT = 2500;
-    const ORIGIN_TOP = 2500;
-
-    // Create a very large element that will make the page scrollable.
-    let veryLargeElement: HTMLElement = document.createElement('div');
-    veryLargeElement.style.width = '4000px';
-    veryLargeElement.style.height = '4000px';
-
-    beforeEach(() => {
-      // Scroll the page such that the origin element is roughly in the
-      // center of the visible viewport (2500 - 1024/2, 2500 - 768/2).
-      document.body.appendChild(veryLargeElement);
-      document.body.scrollTop = 2100;
-      document.body.scrollLeft = 2100;
-
-      originElement.style.top = `${ORIGIN_TOP}px`;
-      originElement.style.left = `${ORIGIN_LEFT}px`;
-
-      originRect = originElement.getBoundingClientRect();
-      originCenterX = originRect.left + (ORIGIN_WIDTH / 2);
-      originCenterY = originRect.top + (ORIGIN_HEIGHT / 2);
+      fakeViewportRuler = new FakeViewportRuler();
+
+      // The origin and overlay elements need to be in the document body in order to have geometry.
+      originElement = createPositionedBlockElement();
+      overlayContainerElement = createFixedElement();
+      overlayElement = createPositionedBlockElement();
+      document.body.appendChild(originElement);
+      document.body.appendChild(overlayContainerElement);
+      overlayContainerElement.appendChild(overlayElement);
+
+      fakeElementRef = new FakeElementRef(originElement);
+      positionBuilder = new OverlayPositionBuilder(new ViewportRuler());
     });
 
     afterEach(() => {
-      document.body.removeChild(veryLargeElement);
-      document.body.scrollTop = 0;
-      document.body.scrollLeft = 0;
-    });
-
-    // Preconditions are set, now just run the full set of simple position tests.
-    runSimplePositionTests();
-  });
+      document.body.removeChild(originElement);
+      document.body.removeChild(overlayContainerElement);
 
-  describe('when near viewport edge', () => {
-    it('should reposition the overlay if it would go off the top of the screen', () => {
-      // We can use the real ViewportRuler in this test since we know that zero is
-      // always the top of the viewport.
-
-      originElement.style.top = '5px';
-      originElement.style.left = '200px';
-      originRect = originElement.getBoundingClientRect();
-
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'end', originY: 'top'},
-        {overlayX: 'end', overlayY: 'bottom'})
-        .withFallbackPosition(
-          {originX: 'start', originY: 'bottom'},
-          {overlayX: 'start', overlayY: 'top'});
-
-      strategy.apply(overlayElement);
-
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.bottom);
-      expect(overlayRect.left).toBe(originRect.left);
+      // Reset the origin geometry after each test so we don't accidently keep state between tests.
+      originRect = null;
+      originCenterX = null;
+      originCenterY = null;
     });
 
-    it('should reposition the overlay if it would go off the left of the screen', () => {
-      // We can use the real ViewportRuler in this test since we know that zero is
-      // always the left edge of the viewport.
-
-      originElement.style.top = '200px';
-      originElement.style.left = '5px';
-      originRect = originElement.getBoundingClientRect();
-      originCenterY = originRect.top + (ORIGIN_HEIGHT / 2);
+    describe('when not near viewport edge, not scrolled', () => {
+      // Place the original element close to the center of the window.
+      // (1024 / 2, 768 / 2). It's not exact, since outerWidth/Height includes browser
+      // chrome, but it doesn't really matter for these tests.
+      const ORIGIN_LEFT = 500;
+      const ORIGIN_TOP = 350;
 
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'start', originY: 'bottom'},
-        {overlayX: 'end', overlayY: 'top'})
-        .withFallbackPosition(
-          {originX: 'end', originY: 'center'},
-          {overlayX: 'start', overlayY: 'center'});
+      beforeEach(() => {
+        originElement.style.left = `${ORIGIN_LEFT}px`;
+        originElement.style.top = `${ORIGIN_TOP}px`;
 
-      strategy.apply(overlayElement);
+        originRect = originElement.getBoundingClientRect();
+        originCenterX = originRect.left + (ORIGIN_WIDTH / 2);
+        originCenterY = originRect.top + (ORIGIN_HEIGHT / 2);
+      });
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originCenterY - (OVERLAY_HEIGHT / 2));
-      expect(overlayRect.left).toBe(originRect.right);
+      // Preconditions are set, now just run the full set of simple position tests.
+      runSimplePositionTests();
     });
 
-    it('should reposition the overlay if it would go off the bottom of the screen', () => {
-      // Use the fake viewport ruler because we don't know *exactly* how big the viewport is.
-      fakeViewportRuler.fakeRect = {
-        top: 0, left: 0, width: 500, height: 500, right: 500, bottom: 500
-      };
-      positionBuilder = new OverlayPositionBuilder(fakeViewportRuler);
-
-      originElement.style.top = '475px';
-      originElement.style.left = '200px';
-      originRect = originElement.getBoundingClientRect();
-
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'start', originY: 'bottom'},
-        {overlayX: 'start', overlayY: 'top'})
-        .withFallbackPosition(
-          {originX: 'end', originY: 'top'},
-          {overlayX: 'end', overlayY: 'bottom'});
+    describe('when scrolled', () => {
+      // Place the original element decently far outside the unscrolled document (1024x768).
+      const ORIGIN_LEFT = 2500;
+      const ORIGIN_TOP = 2500;
+
+      // Create a very large element that will make the page scrollable.
+      let veryLargeElement: HTMLElement = document.createElement('div');
+      veryLargeElement.style.width = '4000px';
+      veryLargeElement.style.height = '4000px';
+
+      beforeEach(() => {
+        // Scroll the page such that the origin element is roughly in the
+        // center of the visible viewport (2500 - 1024/2, 2500 - 768/2).
+        document.body.appendChild(veryLargeElement);
+        document.body.scrollTop = 2100;
+        document.body.scrollLeft = 2100;
+
+        originElement.style.top = `${ORIGIN_TOP}px`;
+        originElement.style.left = `${ORIGIN_LEFT}px`;
+
+        originRect = originElement.getBoundingClientRect();
+        originCenterX = originRect.left + (ORIGIN_WIDTH / 2);
+        originCenterY = originRect.top + (ORIGIN_HEIGHT / 2);
+      });
+
+      afterEach(() => {
+        document.body.removeChild(veryLargeElement);
+        document.body.scrollTop = 0;
+        document.body.scrollLeft = 0;
+      });
+
+      // Preconditions are set, now just run the full set of simple position tests.
+      runSimplePositionTests();
+    });
 
-      strategy.apply(overlayElement);
+    describe('when near viewport edge', () => {
+      it('should reposition the overlay if it would go off the top of the screen', () => {
+        // We can use the real ViewportRuler in this test since we know that zero is
+        // always the top of the viewport.
+
+        originElement.style.top = '5px';
+        originElement.style.left = '200px';
+        originRect = originElement.getBoundingClientRect();
+
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'end', originY: 'top'},
+            {overlayX: 'end', overlayY: 'bottom'})
+            .withFallbackPosition(
+                {originX: 'start', originY: 'bottom'},
+                {overlayX: 'start', overlayY: 'top'});
+
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.bottom);
+        expect(overlayRect.left).toBe(originRect.left);
+      });
+
+      it('should reposition the overlay if it would go off the left of the screen', () => {
+        // We can use the real ViewportRuler in this test since we know that zero is
+        // always the left edge of the viewport.
+
+        originElement.style.top = '200px';
+        originElement.style.left = '5px';
+        originRect = originElement.getBoundingClientRect();
+        originCenterY = originRect.top + (ORIGIN_HEIGHT / 2);
+
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'bottom'},
+            {overlayX: 'end', overlayY: 'top'})
+            .withFallbackPosition(
+                {originX: 'end', originY: 'center'},
+                {overlayX: 'start', overlayY: 'center'});
+
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originCenterY - (OVERLAY_HEIGHT / 2));
+        expect(overlayRect.left).toBe(originRect.right);
+      });
+
+      it('should reposition the overlay if it would go off the bottom of the screen', () => {
+        // Use the fake viewport ruler because we don't know *exactly* how big the viewport is.
+        fakeViewportRuler.fakeRect = {
+          top: 0, left: 0, width: 500, height: 500, right: 500, bottom: 500
+        };
+        positionBuilder = new OverlayPositionBuilder(fakeViewportRuler);
+
+        originElement.style.top = '475px';
+        originElement.style.left = '200px';
+        originRect = originElement.getBoundingClientRect();
+
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'bottom'},
+            {overlayX: 'start', overlayY: 'top'})
+            .withFallbackPosition(
+                {originX: 'end', originY: 'top'},
+                {overlayX: 'end', overlayY: 'bottom'});
+
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.bottom).toBe(originRect.top);
+        expect(overlayRect.right).toBe(originRect.right);
+      });
+
+      it('should reposition the overlay if it would go off the right of the screen', () => {
+        // Use the fake viewport ruler because we don't know *exactly* how big the viewport is.
+        fakeViewportRuler.fakeRect = {
+          top: 0, left: 0, width: 500, height: 500, right: 500, bottom: 500
+        };
+        positionBuilder = new OverlayPositionBuilder(fakeViewportRuler);
+
+        originElement.style.top = '200px';
+        originElement.style.left = '475px';
+        originRect = originElement.getBoundingClientRect();
+
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'end', originY: 'center'},
+            {overlayX: 'start', overlayY: 'center'})
+            .withFallbackPosition(
+                {originX: 'start', originY: 'bottom'},
+                {overlayX: 'end', overlayY: 'top'});
+
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.bottom);
+        expect(overlayRect.right).toBe(originRect.left);
+      });
+
+      it('should position a panel properly when rtl', () => {
+        // must make the overlay longer than the origin to properly test attachment
+        overlayElement.style.width = `500px`;
+        originRect = originElement.getBoundingClientRect();
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'bottom'},
+            {overlayX: 'start', overlayY: 'top'})
+            .withDirection('rtl');
+
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.bottom);
+        expect(overlayRect.right).toBe(originRect.right);
+      });
+
+      it('should position a panel with the x offset provided', () => {
+        originRect = originElement.getBoundingClientRect();
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'top'},
+            {overlayX: 'start', overlayY: 'top'});
+
+        strategy.withOffsetX(10);
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.top);
+        expect(overlayRect.left).toBe(originRect.left + 10);
+      });
+
+      it('should position a panel with the y offset provided', () => {
+        originRect = originElement.getBoundingClientRect();
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'top'},
+            {overlayX: 'start', overlayY: 'top'});
+
+        strategy.withOffsetY(50);
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.top + 50);
+        expect(overlayRect.left).toBe(originRect.left);
+      });
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.bottom).toBe(originRect.top);
-      expect(overlayRect.right).toBe(originRect.right);
     });
 
-    it('should reposition the overlay if it would go off the right of the screen', () => {
-      // Use the fake viewport ruler because we don't know *exactly* how big the viewport is.
+    it('should emit onPositionChange event when position changes', () => {
+      // force the overlay to open in a fallback position
       fakeViewportRuler.fakeRect = {
         top: 0, left: 0, width: 500, height: 500, right: 500, bottom: 500
       };
       positionBuilder = new OverlayPositionBuilder(fakeViewportRuler);
-
       originElement.style.top = '200px';
       originElement.style.left = '475px';
-      originRect = originElement.getBoundingClientRect();
 
       strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'end', originY: 'center'},
-        {overlayX: 'start', overlayY: 'center'})
-        .withFallbackPosition(
-          {originX: 'start', originY: 'bottom'},
-          {overlayX: 'end', overlayY: 'top'});
+          fakeElementRef,
+          {originX: 'end', originY: 'center'},
+          {overlayX: 'start', overlayY: 'center'})
+          .withFallbackPosition(
+              {originX: 'start', originY: 'bottom'},
+              {overlayX: 'end', overlayY: 'top'});
 
-      strategy.apply(overlayElement);
+      const positionChangeHandler = jasmine.createSpy('positionChangeHandler');
+      const subscription = strategy.onPositionChange.subscribe(positionChangeHandler);
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.bottom);
-      expect(overlayRect.right).toBe(originRect.left);
+      strategy.apply(overlayElement);
+      expect(positionChangeHandler).toHaveBeenCalled();
+      expect(positionChangeHandler.calls.mostRecent().args[0])
+          .toEqual(jasmine.any(ConnectedOverlayPositionChange),
+              `Expected strategy to emit an instance of ConnectedOverlayPositionChange.`);
+
+      it('should pick the fallback position that shows the largest area of the element', () => {
+        // Use the fake viewport ruler because we don't know *exactly* how big the viewport is.
+        fakeViewportRuler.fakeRect = {
+          top: 0, left: 0, width: 500, height: 500, right: 500, bottom: 500
+        };
+        positionBuilder = new OverlayPositionBuilder(fakeViewportRuler);
+
+        originElement.style.top = '200px';
+        originElement.style.left = '475px';
+        originRect = originElement.getBoundingClientRect();
+
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'end', originY: 'center'},
+            {overlayX: 'start', overlayY: 'center'})
+            .withFallbackPosition(
+                {originX: 'end', originY: 'top'},
+                {overlayX: 'start', overlayY: 'bottom'})
+            .withFallbackPosition(
+                {originX: 'end', originY: 'top'},
+                {overlayX: 'end', overlayY: 'top'});
+
+        strategy.apply(overlayElement);
+
+        let overlayRect = overlayElement.getBoundingClientRect();
+
+        expect(overlayRect.top).toBe(originRect.top);
+        expect(overlayRect.left).toBe(originRect.left);
+      });
+
+      it('should position a panel properly when rtl', () => {
+        // must make the overlay longer than the origin to properly test attachment
+        overlayElement.style.width = `500px`;
+        originRect = originElement.getBoundingClientRect();
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'bottom'},
+            {overlayX: 'start', overlayY: 'top'})
+            .withDirection('rtl');
+        originElement.style.top = '0';
+        originElement.style.left = '0';
+
+        // If the strategy is re-applied and the initial position would now fit,
+        // the position change event should be emitted again.
+        strategy.apply(overlayElement);
+        expect(positionChangeHandler).toHaveBeenCalledTimes(2);
+
+        subscription.unsubscribe();
+      });
     });
 
-    it('should pick the fallback position that shows the largest area of the element', () => {
-      // Use the fake viewport ruler because we don't know *exactly* how big the viewport is.
-      fakeViewportRuler.fakeRect = {
-        top: 0, left: 0, width: 500, height: 500, right: 500, bottom: 500
-      };
-      positionBuilder = new OverlayPositionBuilder(fakeViewportRuler);
-
-      originElement.style.top = '200px';
-      originElement.style.left = '475px';
-      originRect = originElement.getBoundingClientRect();
 
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'end', originY: 'center'},
-        {overlayX: 'start', overlayY: 'center'})
-        .withFallbackPosition(
-          {originX: 'end', originY: 'top'},
-          {overlayX: 'start', overlayY: 'bottom'})
-        .withFallbackPosition(
-          {originX: 'end', originY: 'top'},
-          {overlayX: 'end', overlayY: 'top'});
+    /**
+     * Run all tests for connecting the overlay to the origin such that first preferred
+     * position does not go off-screen. We do this because there are several cases where we
+     * want to run the exact same tests with different preconditions (e.g., not scroll, scrolled,
+     * different element sized, etc.).
+     */
+    function runSimplePositionTests() {
+      it('should position a panel below, left-aligned', () => {
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'bottom'},
+            {overlayX: 'start', overlayY: 'top'});
 
-      strategy.apply(overlayElement);
+        strategy.apply(overlayElement);
 
-      let overlayRect = overlayElement.getBoundingClientRect();
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.bottom);
+        expect(overlayRect.left).toBe(originRect.left);
+      });
 
-      expect(overlayRect.top).toBe(originRect.top);
-      expect(overlayRect.left).toBe(originRect.left);
-    });
+      it('should position to the right, center aligned vertically', () => {
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'end', originY: 'center'},
+            {overlayX: 'start', overlayY: 'center'});
 
-    it('should position a panel properly when rtl', () => {
-      // must make the overlay longer than the origin to properly test attachment
-      overlayElement.style.width = `500px`;
-      originRect = originElement.getBoundingClientRect();
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'start', originY: 'bottom'},
-        {overlayX: 'start', overlayY: 'top'})
-        .withDirection('rtl');
+        strategy.apply(overlayElement);
 
-      strategy.apply(overlayElement);
-
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.bottom);
-      expect(overlayRect.right).toBe(originRect.right);
-    });
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originCenterY - (OVERLAY_HEIGHT / 2));
+        expect(overlayRect.left).toBe(originRect.right);
+      });
 
-    it('should position a panel with the x offset provided', () => {
-      originRect = originElement.getBoundingClientRect();
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'start', originY: 'top'},
-        {overlayX: 'start', overlayY: 'top'});
-
-      strategy.withOffsetX(10);
-      strategy.apply(overlayElement);
+      it('should position to the left, below', () => {
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'start', originY: 'bottom'},
+            {overlayX: 'end', overlayY: 'top'});
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.top);
-      expect(overlayRect.left).toBe(originRect.left + 10);
-    });
+        strategy.apply(overlayElement);
 
-    it('should position a panel with the y offset provided', () => {
-      originRect = originElement.getBoundingClientRect();
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'start', originY: 'top'},
-        {overlayX: 'start', overlayY: 'top'});
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.bottom);
+        expect(overlayRect.right).toBe(originRect.left);
+      });
 
-      strategy.withOffsetY(50);
-      strategy.apply(overlayElement);
+      it('should position above, right aligned', () => {
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'end', originY: 'top'},
+            {overlayX: 'end', overlayY: 'bottom'});
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.top + 50);
-      expect(overlayRect.left).toBe(originRect.left);
-    });
+        strategy.apply(overlayElement);
 
-  });
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.bottom).toBe(originRect.top);
+        expect(overlayRect.right).toBe(originRect.right);
+      });
 
-  it('should emit onPositionChange event when position changes', () => {
-    // force the overlay to open in a fallback position
-    fakeViewportRuler.fakeRect = {
-      top: 0, left: 0, width: 500, height: 500, right: 500, bottom: 500
-    };
-    positionBuilder = new OverlayPositionBuilder(fakeViewportRuler);
-    originElement.style.top = '200px';
-    originElement.style.left = '475px';
-
-    strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'end', originY: 'center'},
-        {overlayX: 'start', overlayY: 'center'})
-        .withFallbackPosition(
-            {originX: 'start', originY: 'bottom'},
-            {overlayX: 'end', overlayY: 'top'});
+      it('should position below, centered', () => {
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'center', originY: 'bottom'},
+            {overlayX: 'center', overlayY: 'top'});
 
-    const positionChangeHandler = jasmine.createSpy('positionChangeHandler');
-    const subscription = strategy.onPositionChange.subscribe(positionChangeHandler);
+        strategy.apply(overlayElement);
 
-    strategy.apply(overlayElement);
-    expect(positionChangeHandler).toHaveBeenCalled();
-    expect(positionChangeHandler.calls.mostRecent().args[0])
-        .toEqual(jasmine.any(ConnectedOverlayPositionChange),
-            `Expected strategy to emit an instance of ConnectedOverlayPositionChange.`);
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.bottom);
+        expect(overlayRect.left).toBe(originCenterX - (OVERLAY_WIDTH / 2));
+      });
 
-    originElement.style.top = '0';
-    originElement.style.left = '0';
+      it('should center the overlay on the origin', () => {
+        strategy = positionBuilder.connectedTo(
+            fakeElementRef,
+            {originX: 'center', originY: 'center'},
+            {overlayX: 'center', overlayY: 'center'});
 
-    // If the strategy is re-applied and the initial position would now fit,
-    // the position change event should be emitted again.
-    strategy.apply(overlayElement);
-    expect(positionChangeHandler).toHaveBeenCalledTimes(2);
+        strategy.apply(overlayElement);
 
-    subscription.unsubscribe();
+        let overlayRect = overlayElement.getBoundingClientRect();
+        expect(overlayRect.top).toBe(originRect.top);
+        expect(overlayRect.left).toBe(originRect.left);
+      });
+    }
   });
 
+  describe('onPositionChange with scrollable view properties', () => {
+    let overlayElement: HTMLElement;
+    let overlayContainerElement: HTMLElement;
+    let strategy: ConnectedPositionStrategy;
 
-  /**
-   * Run all tests for connecting the overlay to the origin such that first preferred
-   * position does not go off-screen. We do this because there are several cases where we
-   * want to run the exact same tests with different preconditions (e.g., not scroll, scrolled,
-   * different element sized, etc.).
-   */
-  function runSimplePositionTests() {
-    it('should position a panel below, left-aligned', () => {
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'start', originY: 'bottom'},
-        {overlayX: 'start', overlayY: 'top'});
+    let scrollable: HTMLDivElement;
+    let positionChangeHandler: Spy;
+    let onPositionChangeSubscription: Subscription;
+    let positionChange: ConnectedOverlayPositionChange;
 
-      strategy.apply(overlayElement);
-
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.bottom);
-      expect(overlayRect.left).toBe(originRect.left);
-    });
-
-    it('should position to the right, center aligned vertically', () => {
+    beforeEach(() => {
+      // Set up the overlay
+      overlayContainerElement = createFixedElement();
+      overlayElement = createPositionedBlockElement();
+      document.body.appendChild(overlayContainerElement);
+      overlayContainerElement.appendChild(overlayElement);
+
+      // Set up the origin
+      let originElement = createBlockElement();
+      originElement.style.margin = '0 1000px 1000px 0';  // Added so that the container scrolls
+
+      // Create a scrollable container and put the origin inside
+      scrollable = createOverflowContainerElement();
+      document.body.appendChild(scrollable);
+      scrollable.appendChild(originElement);
+
+      // Create a strategy with knowledge of the scrollable container
+      let positionBuilder = new OverlayPositionBuilder(new ViewportRuler());
+      let fakeElementRef = new FakeElementRef(originElement);
       strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'end', originY: 'center'},
-        {overlayX: 'start', overlayY: 'center'});
-
-      strategy.apply(overlayElement);
+          fakeElementRef,
+          {originX: 'start', originY: 'bottom'},
+          {overlayX: 'start', overlayY: 'top'});
+      strategy.withScrollableContainers([new Scrollable(new FakeElementRef(scrollable), null)]);
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originCenterY - (OVERLAY_HEIGHT / 2));
-      expect(overlayRect.left).toBe(originRect.right);
+      positionChangeHandler = jasmine.createSpy('positionChangeHandler');
+      onPositionChangeSubscription = strategy.onPositionChange.subscribe(positionChangeHandler);
     });
 
-    it('should position to the left, below', () => {
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'start', originY: 'bottom'},
-        {overlayX: 'end', overlayY: 'top'});
+    afterEach(() => {
+      onPositionChangeSubscription.unsubscribe();
+      document.body.removeChild(scrollable);
+      document.body.removeChild(overlayContainerElement);
+    });
 
+    it('should not have origin or overlay clipped or out of view without scroll', () => {
       strategy.apply(overlayElement);
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.bottom);
-      expect(overlayRect.right).toBe(originRect.left);
+      expect(positionChangeHandler).toHaveBeenCalled();
+      positionChange = positionChangeHandler.calls.mostRecent().args[0];
+      expect(positionChange.scrollableViewProperties).toEqual({
+        isOriginClipped: false,
+        isOriginOutsideView: false,
+        isOverlayClipped: false,
+        isOverlayOutsideView: false
+      });
     });
 
-    it('should position above, right aligned', () => {
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'end', originY: 'top'},
-        {overlayX: 'end', overlayY: 'bottom'});
-
+    it('should evaluate if origin is clipped if scrolled slightly down', () => {
+      scrollable.scrollTop = 10;  // Clip the origin by 10 pixels
       strategy.apply(overlayElement);
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.bottom).toBe(originRect.top);
-      expect(overlayRect.right).toBe(originRect.right);
+      expect(positionChangeHandler).toHaveBeenCalled();
+      positionChange = positionChangeHandler.calls.mostRecent().args[0];
+      expect(positionChange.scrollableViewProperties).toEqual({
+        isOriginClipped: true,
+        isOriginOutsideView: false,
+        isOverlayClipped: false,
+        isOverlayOutsideView: false
+      });
     });
 
-    it('should position below, centered', () => {
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'center', originY: 'bottom'},
-        {overlayX: 'center', overlayY: 'top'});
-
+    it('should evaluate if origin is out of view and overlay is clipped if scrolled enough', () => {
+      scrollable.scrollTop = 31;  // Origin is 30 pixels, move out of view and clip the overlay 1px
       strategy.apply(overlayElement);
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.bottom);
-      expect(overlayRect.left).toBe(originCenterX - (OVERLAY_WIDTH / 2));
+      expect(positionChangeHandler).toHaveBeenCalled();
+      positionChange = positionChangeHandler.calls.mostRecent().args[0];
+      expect(positionChange.scrollableViewProperties).toEqual({
+        isOriginClipped: true,
+        isOriginOutsideView: true,
+        isOverlayClipped: true,
+        isOverlayOutsideView: false
+      });
     });
 
-    it('should center the overlay on the origin', () => {
-      strategy = positionBuilder.connectedTo(
-        fakeElementRef,
-        {originX: 'center', originY: 'center'},
-        {overlayX: 'center', overlayY: 'center'});
-
+    it('should evaluate the overlay and origin are both out of the view', () => {
+      scrollable.scrollTop = 61;  // Scroll by overlay height + origin height + 1px buffer
       strategy.apply(overlayElement);
 
-      let overlayRect = overlayElement.getBoundingClientRect();
-      expect(overlayRect.top).toBe(originRect.top);
-      expect(overlayRect.left).toBe(originRect.left);
+      expect(positionChangeHandler).toHaveBeenCalled();
+      positionChange = positionChangeHandler.calls.mostRecent().args[0];
+      expect(positionChange.scrollableViewProperties).toEqual({
+        isOriginClipped: true,
+        isOriginOutsideView: true,
+        isOverlayClipped: true,
+        isOverlayOutsideView: true
+      });
     });
-  }
-
+  });
 });
 
-
 /** Creates an absolutely positioned, display: block element with a default size. */
 function createPositionedBlockElement() {
-  let element = document.createElement('div');
+  let element = createBlockElement();
   element.style.position = 'absolute';
   element.style.top = '0';
   element.style.left = '0';
+  return element;
+}
+
+/** Creates a block element with a default size. */
+function createBlockElement() {
+  let element = document.createElement('div');
   element.style.width = `${DEFAULT_WIDTH}px`;
   element.style.height = `${DEFAULT_HEIGHT}px`;
   element.style.backgroundColor = 'rebeccapurple';
@@ -442,6 +563,17 @@ function createFixedElement() {
   return element;
 }
 
+/** Creates an overflow container with a set height and width with margin. */
+function createOverflowContainerElement() {
+  let element = document.createElement('div');
+  element.style.position = 'relative';
+  element.style.overflow = 'auto';
+  element.style.height = '300px';
+  element.style.width = '300px';
+  element.style.margin = '100px';
+  return element;
+}
+
 
 /** Fake implementation of ViewportRuler that just returns the previously given ClientRect. */
 class FakeViewportRuler implements ViewportRuler {
diff --git a/src/lib/core/overlay/position/connected-position-strategy.ts b/src/lib/core/overlay/position/connected-position-strategy.ts
index d6bb569b828c..e5b1059faf51 100644
--- a/src/lib/core/overlay/position/connected-position-strategy.ts
+++ b/src/lib/core/overlay/position/connected-position-strategy.ts
@@ -2,13 +2,26 @@ import {PositionStrategy} from './position-strategy';
 import {ElementRef} from '@angular/core';
 import {ViewportRuler} from './viewport-ruler';
 import {
-    ConnectionPositionPair,
-    OriginConnectionPosition,
-    OverlayConnectionPosition,
-    ConnectedOverlayPositionChange
+  ConnectionPositionPair,
+  OriginConnectionPosition,
+  OverlayConnectionPosition,
+  ConnectedOverlayPositionChange, ScrollableViewProperties
 } from './connected-position';
 import {Subject} from 'rxjs/Subject';
 import {Observable} from 'rxjs/Observable';
+import {Scrollable} from '../scroll/scrollable';
+
+/**
+ * Container to hold the bounding positions of a particular element with respect to the viewport,
+ * where top and bottom are the y-axis coordinates of the bounding rectangle and left and right are
+ * the x-axis coordinates.
+ */
+export type ElementBoundingPositions = {
+  top: number;
+  right: number;
+  bottom: number;
+  left: number;
+}
 
 /**
  * A strategy for positioning overlays. Using this strategy, an overlay is given an
@@ -26,6 +39,9 @@ export class ConnectedPositionStrategy implements PositionStrategy {
   /** The offset in pixels for the overlay connection point on the y-axis */
   private _offsetY: number = 0;
 
+  /** The Scrollable containers used to check scrollable view properties on position change. */
+  private scrollables: Scrollable[] = [];
+
   /** Whether the we're dealing with an RTL context */
   get _isRtl() {
     return this._dir === 'rtl';
@@ -37,7 +53,7 @@ export class ConnectedPositionStrategy implements PositionStrategy {
   /** The origin element against which the overlay will be positioned. */
   private _origin: HTMLElement;
 
-  private _onPositionChange:
+  _onPositionChange:
       Subject<ConnectedOverlayPositionChange> = new Subject<ConnectedOverlayPositionChange>();
 
   /** Emits an event when the connection point changes. */
@@ -95,7 +111,12 @@ export class ConnectedPositionStrategy implements PositionStrategy {
       // If the overlay in the calculated position fits on-screen, put it there and we're done.
       if (overlayPoint.fitsInViewport) {
         this._setElementPosition(element, overlayPoint);
-        this._onPositionChange.next(new ConnectedOverlayPositionChange(pos));
+
+        // Notify that the position has been changed along with its change properties.
+        const scrollableViewProperties = this.getScrollableViewProperties(element);
+        const positionChange = new ConnectedOverlayPositionChange(pos, scrollableViewProperties);
+        this._onPositionChange.next(positionChange);
+
         return Promise.resolve(null);
       } else if (!fallbackPoint || fallbackPoint.visibleArea < overlayPoint.visibleArea) {
         fallbackPoint = overlayPoint;
@@ -109,6 +130,15 @@ export class ConnectedPositionStrategy implements PositionStrategy {
     return Promise.resolve(null);
   }
 
+  /**
+   * Sets the list of Scrollable containers that host the origin element so that
+   * on reposition we can evaluate if it or the overlay has been clipped or outside view. Every
+   * Scrollable must be an ancestor element of the strategy's origin element.
+   */
+  withScrollableContainers(scrollables: Scrollable[]) {
+    this.scrollables = scrollables;
+  }
+
   /**
    * Adds a new preferred fallback position.
    * @param originPos
@@ -241,6 +271,53 @@ export class ConnectedPositionStrategy implements PositionStrategy {
     return {x, y, fitsInViewport, visibleArea};
   }
 
+  /**
+   * Gets the view properties of the trigger and overlay, including whether they are clipped
+   * or completely outside the view of any of the strategy's scrollables.
+   */
+  private getScrollableViewProperties(overlay: HTMLElement): ScrollableViewProperties {
+    const originBounds = this._getElementBounds(this._origin);
+    const overlayBounds = this._getElementBounds(overlay);
+    const scrollContainerBounds = this.scrollables.map((scrollable: Scrollable) => {
+      return this._getElementBounds(scrollable.getElementRef().nativeElement);
+    });
+
+    return {
+      isOriginClipped: this.isElementClipped(originBounds, scrollContainerBounds),
+      isOriginOutsideView: this.isElementOutsideView(originBounds, scrollContainerBounds),
+      isOverlayClipped: this.isElementClipped(overlayBounds, scrollContainerBounds),
+      isOverlayOutsideView: this.isElementOutsideView(overlayBounds, scrollContainerBounds),
+    };
+  }
+
+  /** Whether the element is completely out of the view of any of the containers. */
+  private isElementOutsideView(
+      elementBounds: ElementBoundingPositions,
+      containersBounds: ElementBoundingPositions[]): boolean {
+    return containersBounds.some((containerBounds: ElementBoundingPositions) => {
+      const outsideAbove = elementBounds.bottom < containerBounds.top;
+      const outsideBelow = elementBounds.top > containerBounds.bottom;
+      const outsideLeft = elementBounds.right < containerBounds.left;
+      const outsideRight = elementBounds.left > containerBounds.right;
+
+      return outsideAbove || outsideBelow || outsideLeft || outsideRight;
+    });
+  }
+
+  /** Whether the element is clipped by any of the containers. */
+  private isElementClipped(
+      elementBounds: ElementBoundingPositions,
+      containersBounds: ElementBoundingPositions[]): boolean {
+    return containersBounds.some((containerBounds: ElementBoundingPositions) => {
+      const clippedAbove = elementBounds.top < containerBounds.top;
+      const clippedBelow = elementBounds.bottom > containerBounds.bottom;
+      const clippedLeft = elementBounds.left < containerBounds.left;
+      const clippedRight = elementBounds.right > containerBounds.right;
+
+      return clippedAbove || clippedBelow || clippedLeft || clippedRight;
+    });
+  }
+
   /**
    * Physically positions the overlay element to the given coordinate.
    * @param element
@@ -251,6 +328,17 @@ export class ConnectedPositionStrategy implements PositionStrategy {
     element.style.top = overlayPoint.y + 'px';
   }
 
+  /** Returns the bounding positions of the provided element with respect to the viewport. */
+  private _getElementBounds(element: HTMLElement): ElementBoundingPositions {
+    const boundingClientRect = element.getBoundingClientRect();
+    return {
+      top: boundingClientRect.top,
+      right: boundingClientRect.left + boundingClientRect.width,
+      bottom: boundingClientRect.top + boundingClientRect.height,
+      left: boundingClientRect.left
+    };
+  }
+
   /**
    * Subtracts the amount that an element is overflowing on an axis from it's length.
    */
@@ -265,7 +353,7 @@ export class ConnectedPositionStrategy implements PositionStrategy {
 interface Point {
   x: number;
   y: number;
-};
+}
 
 /**
  * Expands the simple (x, y) coordinate by adding info about whether the
diff --git a/src/lib/core/overlay/position/connected-position.ts b/src/lib/core/overlay/position/connected-position.ts
index b2e5b9b4a000..a995851bcf89 100644
--- a/src/lib/core/overlay/position/connected-position.ts
+++ b/src/lib/core/overlay/position/connected-position.ts
@@ -1,4 +1,5 @@
 /** Horizontal dimension of a connection point on the perimeter of the origin or overlay element. */
+import {Optional} from '@angular/core';
 export type HorizontalConnectionPos = 'start' | 'center' | 'end';
 
 /** Vertical dimension of a connection point on the perimeter of the origin or overlay element. */
@@ -32,7 +33,38 @@ export class ConnectionPositionPair {
   }
 }
 
+/**
+ * Set of properties regarding the position of the origin and overlay relative to the viewport
+ * with respect to the containing Scrollable elements.
+ *
+ * The overlay and origin are clipped if any part of their bounding client rectangle exceeds the
+ * bounds of any one of the strategy's Scrollable's bounding client rectangle.
+ *
+ * The overlay and origin are outside view if there is no overlap between their bounding client
+ * rectangle and any one of the strategy's Scrollable's bounding client rectangle.
+ *
+ *       -----------                    -----------
+ *       | outside |                    | clipped |
+ *       |  view   |              --------------------------
+ *       |         |              |     |         |        |
+ *       ----------               |     -----------        |
+ *  --------------------------    |                        |
+ *  |                        |    |      Scrollable        |
+ *  |                        |    |                        |
+ *  |                        |     --------------------------
+ *  |      Scrollable        |
+ *  |                        |
+ *  --------------------------
+ */
+export class ScrollableViewProperties {
+  isOriginClipped: boolean;
+  isOriginOutsideView: boolean;
+  isOverlayClipped: boolean;
+  isOverlayOutsideView: boolean;
+}
+
 /** The change event emitted by the strategy when a fallback position is used. */
 export class ConnectedOverlayPositionChange {
-  constructor(public connectionPair: ConnectionPositionPair) {}
+  constructor(public connectionPair: ConnectionPositionPair,
+              @Optional() public scrollableViewProperties: ScrollableViewProperties) {}
 }
diff --git a/src/lib/core/overlay/scroll/scroll-dispatcher.spec.ts b/src/lib/core/overlay/scroll/scroll-dispatcher.spec.ts
index 8975198ab9ce..f342d56cb10d 100644
--- a/src/lib/core/overlay/scroll/scroll-dispatcher.spec.ts
+++ b/src/lib/core/overlay/scroll/scroll-dispatcher.spec.ts
@@ -1,12 +1,10 @@
 import {inject, TestBed, async, ComponentFixture} from '@angular/core/testing';
-import {NgModule, Component, ViewChild, ElementRef} from '@angular/core';
+import {NgModule, Component, ViewChild, ElementRef, QueryList, ViewChildren} from '@angular/core';
 import {ScrollDispatcher} from './scroll-dispatcher';
 import {OverlayModule} from '../overlay-directives';
 import {Scrollable} from './scrollable';
 
 describe('Scroll Dispatcher', () => {
-  let scroll: ScrollDispatcher;
-  let fixture: ComponentFixture<ScrollingComponent>;
 
   beforeEach(async(() => {
     TestBed.configureTestingModule({
@@ -16,45 +14,71 @@ describe('Scroll Dispatcher', () => {
     TestBed.compileComponents();
   }));
 
-  beforeEach(inject([ScrollDispatcher], (s: ScrollDispatcher) => {
-    scroll = s;
+  describe('Basic usage', () => {
+    let scroll: ScrollDispatcher;
+    let fixture: ComponentFixture<ScrollingComponent>;
 
-    fixture = TestBed.createComponent(ScrollingComponent);
-    fixture.detectChanges();
-  }));
+    beforeEach(inject([ScrollDispatcher], (s: ScrollDispatcher) => {
+      scroll = s;
 
-  it('should be registered with the scrollable directive with the scroll service', () => {
-    const componentScrollable = fixture.componentInstance.scrollable;
-    expect(scroll.scrollableReferences.has(componentScrollable)).toBe(true);
-  });
+      fixture = TestBed.createComponent(ScrollingComponent);
+      fixture.detectChanges();
+    }));
+
+    it('should be registered with the scrollable directive with the scroll service', () => {
+      const componentScrollable = fixture.componentInstance.scrollable;
+      expect(scroll.scrollableReferences.has(componentScrollable)).toBe(true);
+    });
+
+    it('should have the scrollable directive deregistered when the component is destroyed', () => {
+      const componentScrollable = fixture.componentInstance.scrollable;
+      expect(scroll.scrollableReferences.has(componentScrollable)).toBe(true);
 
-  it('should have the scrollable directive deregistered when the component is destroyed', () => {
-    const componentScrollable = fixture.componentInstance.scrollable;
-    expect(scroll.scrollableReferences.has(componentScrollable)).toBe(true);
+      fixture.destroy();
+      expect(scroll.scrollableReferences.has(componentScrollable)).toBe(false);
+    });
+
+    it('should notify through the directive and service that a scroll event occurred', () => {
+      let hasDirectiveScrollNotified = false;
+      // Listen for notifications from scroll directive
+      let scrollable = fixture.componentInstance.scrollable;
+      scrollable.elementScrolled().subscribe(() => { hasDirectiveScrollNotified = true; });
+
+      // Listen for notifications from scroll service
+      let hasServiceScrollNotified = false;
+      scroll.scrolled().subscribe(() => { hasServiceScrollNotified = true; });
 
-    fixture.destroy();
-    expect(scroll.scrollableReferences.has(componentScrollable)).toBe(false);
+      // Emit a scroll event from the scrolling element in our component.
+      // This event should be picked up by the scrollable directive and notify.
+      // The notification should be picked up by the service.
+      const scrollEvent = document.createEvent('UIEvents');
+      scrollEvent.initUIEvent('scroll', true, true, window, 0);
+      fixture.componentInstance.scrollingElement.nativeElement.dispatchEvent(scrollEvent);
+
+      expect(hasDirectiveScrollNotified).toBe(true);
+      expect(hasServiceScrollNotified).toBe(true);
+    });
   });
 
-  it('should notify through the directive and service that a scroll event occurred', () => {
-    let hasDirectiveScrollNotified = false;
-    // Listen for notifications from scroll directive
-    let scrollable = fixture.componentInstance.scrollable;
-    scrollable.elementScrolled().subscribe(() => { hasDirectiveScrollNotified = true; });
-
-    // Listen for notifications from scroll service
-    let hasServiceScrollNotified = false;
-    scroll.scrolled().subscribe(() => { hasServiceScrollNotified = true; });
-
-    // Emit a scroll event from the scrolling element in our component.
-    // This event should be picked up by the scrollable directive and notify.
-    // The notification should be picked up by the service.
-    const scrollEvent = document.createEvent('UIEvents');
-    scrollEvent.initUIEvent('scroll', true, true, window, 0);
-    fixture.componentInstance.scrollingElement.nativeElement.dispatchEvent(scrollEvent);
-
-    expect(hasDirectiveScrollNotified).toBe(true);
-    expect(hasServiceScrollNotified).toBe(true);
+  describe('Nested scrollables', () => {
+    let scroll: ScrollDispatcher;
+    let fixture: ComponentFixture<NestedScrollingComponent>;
+
+    beforeEach(inject([ScrollDispatcher], (s: ScrollDispatcher) => {
+      scroll = s;
+
+      fixture = TestBed.createComponent(NestedScrollingComponent);
+      fixture.detectChanges();
+    }));
+
+    it('should be able to identify the containing scrollables of an element', () => {
+      const interestingElement = fixture.componentInstance.interestingElement;
+      const scrollContainers = scroll.getScrollContainers(interestingElement);
+      const scrollableElementIds =
+          scrollContainers.map(scrollable => scrollable.getElementRef().nativeElement.id);
+
+      expect(scrollableElementIds).toEqual(['scrollable-1', 'scrollable-1a']);
+    });
   });
 });
 
@@ -68,7 +92,25 @@ class ScrollingComponent {
   @ViewChild('scrollingElement') scrollingElement: ElementRef;
 }
 
-const TEST_COMPONENTS = [ScrollingComponent];
+
+/** Component containing nested scrollables. */
+@Component({
+  template: `
+    <div id="scrollable-1" cdk-scrollable>
+      <div id="scrollable-1a" cdk-scrollable>
+        <div #interestingElement></div>
+      </div>
+      <div id="scrollable-1b" cdk-scrollable></div>
+    </div>
+    <div id="scrollable-2" cdk-scrollable></div>
+  `
+})
+class NestedScrollingComponent {
+  @ViewChild('interestingElement') interestingElement: ElementRef;
+  @ViewChildren(Scrollable) scrollables: QueryList<Scrollable>;
+}
+
+const TEST_COMPONENTS = [ScrollingComponent, NestedScrollingComponent];
 @NgModule({
   imports: [OverlayModule],
   providers: [ScrollDispatcher],
diff --git a/src/lib/core/overlay/scroll/scroll-dispatcher.ts b/src/lib/core/overlay/scroll/scroll-dispatcher.ts
index 199cee3bb12e..d9f2c25d860f 100644
--- a/src/lib/core/overlay/scroll/scroll-dispatcher.ts
+++ b/src/lib/core/overlay/scroll/scroll-dispatcher.ts
@@ -1,4 +1,4 @@
-import {Injectable} from '@angular/core';
+import {Injectable, ElementRef} from '@angular/core';
 import {Scrollable} from './scrollable';
 import {Subject} from 'rxjs/Subject';
 import {Observable} from 'rxjs/Observable';
@@ -19,7 +19,7 @@ export class ScrollDispatcher {
    * Map of all the scrollable references that are registered with the service and their
    * scroll event subscriptions.
    */
-  scrollableReferences: WeakMap<Scrollable, Subscription> = new WeakMap();
+  scrollableReferences: Map<Scrollable, Subscription> = new Map();
 
   constructor() {
     // By default, notify a scroll event when the document is scrolled or the window is resized.
@@ -57,8 +57,34 @@ export class ScrollDispatcher {
     return this._scrolled.asObservable();
   }
 
+  /** Returns all registered Scrollables that contain the provided element. */
+  getScrollContainers(elementRef: ElementRef): Scrollable[] {
+    const scrollingContainers: Scrollable[] = [];
+
+    this.scrollableReferences.forEach((subscription: Subscription, scrollable: Scrollable) => {
+      if (this.scrollableContainsElement(scrollable, elementRef)) {
+        scrollingContainers.push(scrollable);
+      }
+    });
+
+    return scrollingContainers;
+  }
+
+  /** Returns true if the element is contained within the provided Scrollable. */
+  scrollableContainsElement(scrollable: Scrollable, elementRef: ElementRef): boolean {
+    let element = elementRef.nativeElement;
+    let scrollableElement = scrollable.getElementRef().nativeElement;
+
+    // Traverse through the element parents until we reach null, checking if any of the elements
+    // are the scrollable's element.
+    do {
+      if (element == scrollableElement) { return true; }
+    } while (element = element.parentElement);
+  }
+
   /** Sends a notification that a scroll event has been fired. */
   _notify() {
     this._scrolled.next();
   }
 }
+
diff --git a/src/lib/core/overlay/scroll/scrollable.ts b/src/lib/core/overlay/scroll/scrollable.ts
index cf13dec05002..3e5f2bb03616 100644
--- a/src/lib/core/overlay/scroll/scrollable.ts
+++ b/src/lib/core/overlay/scroll/scrollable.ts
@@ -1,6 +1,4 @@
-import {
-  Directive, ElementRef, OnInit, OnDestroy
-} from '@angular/core';
+import {Directive, ElementRef, OnInit, OnDestroy} from '@angular/core';
 import {Observable} from 'rxjs/Observable';
 import {ScrollDispatcher} from './scroll-dispatcher';
 import 'rxjs/add/observable/fromEvent';
@@ -15,7 +13,8 @@ import 'rxjs/add/observable/fromEvent';
   selector: '[cdk-scrollable]'
 })
 export class Scrollable implements OnInit, OnDestroy {
-  constructor(private _elementRef: ElementRef, private _scroll: ScrollDispatcher) {}
+  constructor(private _elementRef: ElementRef,
+              private _scroll: ScrollDispatcher) {}
 
   ngOnInit() {
     this._scroll.register(this);
@@ -31,4 +30,8 @@ export class Scrollable implements OnInit, OnDestroy {
   elementScrolled(): Observable<any> {
     return Observable.fromEvent(this._elementRef.nativeElement, 'scroll');
   }
+
+  getElementRef(): ElementRef {
+    return this._elementRef;
+  }
 }
diff --git a/src/lib/sidenav/sidenav-container.html b/src/lib/sidenav/sidenav-container.html
index c916ef399af4..652ebf250c62 100644
--- a/src/lib/sidenav/sidenav-container.html
+++ b/src/lib/sidenav/sidenav-container.html
@@ -3,6 +3,6 @@
 
 <ng-content select="md-sidenav, mat-sidenav"></ng-content>
 
-<div class="md-sidenav-content" [ngStyle]="_getStyles()" cdk-scrollable>
+<div class="md-sidenav-content" [ngStyle]="_getStyles()">
   <ng-content></ng-content>
 </div>
diff --git a/src/lib/sidenav/sidenav.ts b/src/lib/sidenav/sidenav.ts
index 89852ac84dd4..f12e3c3c0f74 100644
--- a/src/lib/sidenav/sidenav.ts
+++ b/src/lib/sidenav/sidenav.ts
@@ -22,7 +22,6 @@ import {FocusTrap} from '../core/a11y/focus-trap';
 import {ESCAPE} from '../core/keyboard/keycodes';
 import {OverlayModule} from '../core/overlay/overlay-directives';
 import {InteractivityChecker} from '../core/a11y/interactivity-checker';
-import {ScrollDispatcher} from '../core/overlay/scroll/scroll-dispatcher';
 
 
 /** Exception thrown when two MdSidenav are matching the same side. */
@@ -516,7 +515,7 @@ export class MdSidenavModule {
   static forRoot(): ModuleWithProviders {
     return {
       ngModule: MdSidenavModule,
-      providers: [InteractivityChecker, ScrollDispatcher]
+      providers: [InteractivityChecker]
     };
   }
 }
diff --git a/src/lib/tooltip/tooltip.spec.ts b/src/lib/tooltip/tooltip.spec.ts
index 83c9ac5a1657..70abb527b47c 100644
--- a/src/lib/tooltip/tooltip.spec.ts
+++ b/src/lib/tooltip/tooltip.spec.ts
@@ -1,16 +1,17 @@
 import {
-    async,
-    ComponentFixture,
-    TestBed,
-    tick,
-    fakeAsync,
-    flushMicrotasks
+  async,
+  ComponentFixture,
+  TestBed,
+  tick,
+  fakeAsync,
+  flushMicrotasks
 } from '@angular/core/testing';
 import {Component, DebugElement, AnimationTransitionEvent} from '@angular/core';
 import {By} from '@angular/platform-browser';
 import {TooltipPosition, MdTooltip, MdTooltipModule} from './tooltip';
 import {OverlayContainer} from '../core';
 import {Dir, LayoutDirection} from '../core/rtl/dir';
+import {OverlayModule} from '../core/overlay/overlay-directives';
 
 const initialTooltipMessage = 'initial tooltip message';
 
@@ -20,7 +21,7 @@ describe('MdTooltip', () => {
 
   beforeEach(async(() => {
     TestBed.configureTestingModule({
-      imports: [MdTooltipModule.forRoot()],
+      imports: [MdTooltipModule.forRoot(), OverlayModule],
       declarations: [BasicTooltipDemo],
       providers: [
         {provide: OverlayContainer, useFactory: () => {
@@ -312,3 +313,4 @@ class BasicTooltipDemo {
   message: string = initialTooltipMessage;
   showButton: boolean = true;
 }
+
diff --git a/src/lib/tooltip/tooltip.ts b/src/lib/tooltip/tooltip.ts
index 264b7f7851ed..e4c1849452d8 100644
--- a/src/lib/tooltip/tooltip.ts
+++ b/src/lib/tooltip/tooltip.ts
@@ -14,8 +14,7 @@ import {
   AnimationTransitionEvent,
   NgZone,
   Optional,
-  OnDestroy,
-  OnInit
+  OnDestroy
 } from '@angular/core';
 import {
   Overlay,
@@ -31,7 +30,6 @@ import {MdTooltipInvalidPositionError} from './tooltip-errors';
 import {Observable} from 'rxjs/Observable';
 import {Subject} from 'rxjs/Subject';
 import {Dir} from '../core/rtl/dir';
-import {ScrollDispatcher} from '../core/overlay/scroll/scroll-dispatcher';
 import {OVERLAY_PROVIDERS} from '../core/overlay/overlay';
 import 'rxjs/add/operator/first';
 
@@ -56,7 +54,7 @@ export const TOUCHEND_HIDE_DELAY  = 1500;
   },
   exportAs: 'mdTooltip',
 })
-export class MdTooltip implements OnInit, OnDestroy {
+export class MdTooltip implements OnDestroy {
   _overlayRef: OverlayRef;
   _tooltipInstance: TooltipComponent;
 
@@ -105,21 +103,10 @@ export class MdTooltip implements OnInit, OnDestroy {
   set _deprecatedMessage(v: string) { this.message = v; }
 
   constructor(private _overlay: Overlay,
-              private _scrollDispatcher: ScrollDispatcher,
               private _elementRef: ElementRef,
               private _viewContainerRef: ViewContainerRef,
               private _ngZone: NgZone,
-              @Optional() private _dir: Dir) {}
-
-  ngOnInit() {
-    // When a scroll on the page occurs, update the position in case this tooltip needs
-    // to be repositioned.
-    this._scrollDispatcher.scrolled().subscribe(() => {
-      if (this._overlayRef) {
-        this._overlayRef.updatePosition();
-      }
-    });
-  }
+              @Optional() private _dir: Dir) { }
 
   /**
    * Dispose the tooltip when destroyed.
@@ -400,10 +387,7 @@ export class MdTooltipModule {
   static forRoot(): ModuleWithProviders {
     return {
       ngModule: MdTooltipModule,
-      providers: [
-        OVERLAY_PROVIDERS,
-        ScrollDispatcher
-      ]
+      providers: [OVERLAY_PROVIDERS]
     };
   }
 }