diff --git a/src/lib/snack-bar/index.ts b/src/lib/snack-bar/index.ts
index 4a20b47466ac..b07c7374a06e 100644
--- a/src/lib/snack-bar/index.ts
+++ b/src/lib/snack-bar/index.ts
@@ -1,4 +1,4 @@
 export * from './snack-bar';
 export * from './snack-bar-container';
 export * from './snack-bar-config';
-export * from './snack-bar-ref';
\ No newline at end of file
+export * from './snack-bar-ref';
diff --git a/src/lib/snack-bar/simple-snack-bar.ts b/src/lib/snack-bar/simple-snack-bar.ts
index d74d6736c3df..a9a1f5d13132 100644
--- a/src/lib/snack-bar/simple-snack-bar.ts
+++ b/src/lib/snack-bar/simple-snack-bar.ts
@@ -24,7 +24,7 @@ export class SimpleSnackBar {
 
   /** Dismisses the snack bar. */
   dismiss(): void {
-    this.snackBarRef.dismiss();
+    this.snackBarRef.action_();
   }
 
   /** If the action button should be shown. */
diff --git a/src/lib/snack-bar/snack-bar-ref.ts b/src/lib/snack-bar/snack-bar-ref.ts
index 5b088df78c4f..1c54726efcfa 100644
--- a/src/lib/snack-bar/snack-bar-ref.ts
+++ b/src/lib/snack-bar/snack-bar-ref.ts
@@ -19,12 +19,17 @@ export class MdSnackBarRef<T> {
   /** Subject for notifying the user that the snack bar has closed. */
   private _afterClosed: Subject<any> = new Subject();
 
+  /** Subject for notifying the user that the snack bar action was called. */
+  private _onAction: Subject<any> = new Subject();
+
   constructor(instance: T,
               containerInstance: MdSnackBarContainer,
               private _overlayRef: OverlayRef) {
     // Sets the readonly instance of the snack bar content component.
     this.instance = instance;
     this.containerInstance = containerInstance;
+    // Dismiss snackbar on action.
+    this.onAction().subscribe(() => this.dismiss());
   }
 
   /** Dismisses the snack bar. */
@@ -38,8 +43,21 @@ export class MdSnackBarRef<T> {
     }
   }
 
+  /** Marks the snackbar action clicked. */
+  action_(): void {
+    if (!this._onAction.closed) {
+      this._onAction.next();
+      this._onAction.complete();
+    }
+  }
+
   /** Gets an observable that is notified when the snack bar is finished closing. */
   afterDismissed(): Observable<void> {
     return this._afterClosed.asObservable();
   }
+
+  /** Gets an observable that is notified when the snack bar action is called. */
+  onAction(): Observable<void> {
+    return this._onAction.asObservable();
+  }
 }
diff --git a/src/lib/snack-bar/snack-bar.spec.ts b/src/lib/snack-bar/snack-bar.spec.ts
index 11b50d8f7ffd..5640fedaa0cc 100644
--- a/src/lib/snack-bar/snack-bar.spec.ts
+++ b/src/lib/snack-bar/snack-bar.spec.ts
@@ -259,6 +259,34 @@ describe('MdSnackBar', () => {
     // Let remaining animations run.
     tick(500);
   }));
+
+  it('should dismiss the snackbar when the action is called, notifying of both action and dismiss',
+     fakeAsync(() => {
+       let dismissObservableCompleted = false;
+       let actionObservableCompleted = false;
+       let snackBarRef = snackBar.open('Some content', 'dismiss');
+       viewContainerFixture.detectChanges();
+
+       snackBarRef.afterDismissed().subscribe(null, null, () => {
+         dismissObservableCompleted = true;
+       });
+       snackBarRef.onAction().subscribe(null, null, () => {
+         actionObservableCompleted = true;
+      });
+
+      let actionButton =
+        overlayContainerElement.querySelector('.md-simple-snackbar-action') as HTMLButtonElement;
+      actionButton.click();
+      viewContainerFixture.detectChanges();
+      flushMicrotasks();
+
+      viewContainerFixture.whenStable().then(() => {
+        expect(dismissObservableCompleted).toBeTruthy('Expected the snack bar to be dismissed');
+        expect(actionObservableCompleted).toBeTruthy('Expected the snack bar to notify of action');
+      });
+
+      tick(500);
+    }));
 });
 
 @Directive({selector: 'dir-with-view-container'})