diff --git a/packages/@angular/cli/commands/init.run.ts b/packages/@angular/cli/commands/init.run.ts
index c243ab4b76c4..ddacee8d19a8 100644
--- a/packages/@angular/cli/commands/init.run.ts
+++ b/packages/@angular/cli/commands/init.run.ts
@@ -1,12 +1,16 @@
 import * as chalk from 'chalk';
+import {checkYarnOrCNPM} from '../utilities/check-package-manager';
+import {CliConfig} from '../models/config';
 import LinkCli from '../tasks/link-cli';
 import NpmInstall from '../tasks/npm-install';
 import { validateProjectName } from '../utilities/validate-project-name';
 
+
 const Promise = require('../ember-cli/lib/ext/promise');
 const SilentError = require('silent-error');
 const normalizeBlueprint = require('../ember-cli/lib/utilities/normalize-blueprint-option');
 const GitInit = require('../tasks/git-init');
+const config = CliConfig.fromProject();
 
 
 export default function initRun(commandOptions: any, rawArgs: string[]) {
@@ -31,9 +35,14 @@ export default function initRun(commandOptions: any, rawArgs: string[]) {
 
   let npmInstall: any;
   if (!commandOptions.skipNpm) {
+    let packageManager = 'npm';
+    if (config && config.get('packageManager')) {
+      packageManager = config.get('packageManager');
+    }
     npmInstall = new NpmInstall({
       ui: this.ui,
-      project: this.project
+      project: this.project,
+      packageManager
     });
   }
 
@@ -93,6 +102,7 @@ export default function initRun(commandOptions: any, rawArgs: string[]) {
         return linkCli.run();
       }
     })
+    .then(checkYarnOrCNPM)
     .then(() => {
       this.ui.writeLine(chalk.green(`Project '${packageName}' successfully created.`));
     });
diff --git a/packages/@angular/cli/lib/config/schema.json b/packages/@angular/cli/lib/config/schema.json
index 9c1d753aa09b..2877901d7511 100644
--- a/packages/@angular/cli/lib/config/schema.json
+++ b/packages/@angular/cli/lib/config/schema.json
@@ -292,6 +292,10 @@
       },
       "additionalProperties": false
     },
+    "packageManager": {
+        "enum": [ "npm", "cnpm", "yarn", "default" ],
+        "default": "npm"
+    },
     "warnings": {
       "description": "Allow people to disable console warnings.",
       "type": "object",
diff --git a/packages/@angular/cli/tasks/npm-install.ts b/packages/@angular/cli/tasks/npm-install.ts
index 02e3f5d1cc27..13b8b09c8b38 100644
--- a/packages/@angular/cli/tasks/npm-install.ts
+++ b/packages/@angular/cli/tasks/npm-install.ts
@@ -6,17 +6,18 @@ import {exec} from 'child_process';
 export default Task.extend({
   run: function() {
     const ui = this.ui;
+    const packageManager = this.packageManager;
 
     return new Promise(function(resolve, reject) {
-      ui.writeLine(chalk.green('Installing packages for tooling via npm.'));
-      exec('npm install',
+      ui.writeLine(chalk.green(`Installing packages for tooling via ${packageManager}.`));
+      exec(`${packageManager} install`,
         (err: NodeJS.ErrnoException, stdout: string, stderr: string) => {
         if (err) {
           ui.writeLine(stderr);
           ui.writeLine(chalk.red('Package install failed, see above.'));
           reject();
         } else {
-          ui.writeLine(chalk.green('Installed packages for tooling via npm.'));
+          ui.writeLine(chalk.green(`Installed packages for tooling via ${packageManager}.`));
           resolve();
         }
       });
diff --git a/packages/@angular/cli/utilities/check-package-manager.ts b/packages/@angular/cli/utilities/check-package-manager.ts
new file mode 100644
index 000000000000..d1dcaefd8b58
--- /dev/null
+++ b/packages/@angular/cli/utilities/check-package-manager.ts
@@ -0,0 +1,42 @@
+import * as chalk from 'chalk';
+import {exec} from 'child_process';
+
+import {CliConfig} from '../models/config';
+
+const Promise = require('../ember-cli/lib/ext/promise');
+const config = CliConfig.fromProject();
+
+const execPromise = Promise.denodeify(exec);
+
+let packageManager = 'npm';
+if (config && config.get('packageManager')) {
+  packageManager = config.get('packageManager');
+}
+
+export function checkYarnOrCNPM() {
+  return Promise
+      .all([checkYarn(), checkCNPM()])
+      .then((data: Array<boolean>) => {
+        if (packageManager === 'npm') {
+          const [isYarnInstalled, isCNPMInstalled] = data;
+          if (isYarnInstalled && isCNPMInstalled) {
+            console.log(chalk.yellow('You can `ng set --global packageManager=yarn` ' +
+            'or `ng set --global packageManager=cnpm`.'));
+          } else if (isYarnInstalled) {
+            console.log(chalk.yellow('You can `ng set --global packageManager=yarn`.'));
+          } else if (isCNPMInstalled) {
+            console.log(chalk.yellow('You can `ng set --global packageManager=cnpm`.'));
+          }
+        }
+      });
+}
+
+function checkYarn() {
+  return execPromise('yarn --version')
+    .then(() => true, () => false);
+}
+
+function checkCNPM() {
+  return execPromise('cnpm --version')
+    .then(() => true, () => false);
+}
diff --git a/tests/e2e/tests/commands/new/check-yarn.ts b/tests/e2e/tests/commands/new/check-yarn.ts
new file mode 100644
index 000000000000..7078be1fef4b
--- /dev/null
+++ b/tests/e2e/tests/commands/new/check-yarn.ts
@@ -0,0 +1,16 @@
+import {ng} from '../../../utils/process';
+import {getGlobalVariable} from '../../../utils/env';
+
+const yarnRegEx = /You can `ng set --global packageManager=yarn`./;
+
+export default function() {
+  return Promise.resolve()
+    .then(() => process.chdir(getGlobalVariable('tmp-root')))
+    .then(() =>  ng('new', 'foo'))
+    .then((stdout) => {
+      // assuming yarn is installed and checking for message with yarn
+      if (!stdout.toString().match(yarnRegEx)) {
+        throw new Error('Should display message to use yarn packageManager');
+      }
+    });
+}