diff --git a/src/lib/menu/menu-directive.ts b/src/lib/menu/menu-directive.ts
index bc1a0c35c0ec..e4edc8d6e801 100644
--- a/src/lib/menu/menu-directive.ts
+++ b/src/lib/menu/menu-directive.ts
@@ -20,6 +20,8 @@ import {FocusKeyManager} from '../core/a11y/focus-key-manager';
 import {MdMenuPanel} from './menu-panel';
 import {Subscription} from 'rxjs/Subscription';
 import {transformMenu, fadeInItems} from './menu-animations';
+import {ESCAPE} from '../core/keyboard/keycodes';
+
 
 @Component({
   moduleId: module.id,
@@ -75,17 +77,6 @@ export class MdMenu implements AfterContentInit, MdMenuPanel, OnDestroy {
   /** Whether the menu should overlap its trigger. */
   @Input() overlapTrigger = true;
 
-  ngAfterContentInit() {
-    this._keyManager = new FocusKeyManager(this.items).withWrap();
-    this._tabSubscription = this._keyManager.tabOut.subscribe(() => this._emitCloseEvent());
-  }
-
-  ngOnDestroy() {
-    if (this._tabSubscription) {
-      this._tabSubscription.unsubscribe();
-    }
-  }
-
   /**
    * This method takes classes set on the host md-menu element and applies them on the
    * menu template that displays in the overlay container.  Otherwise, it's difficult
@@ -104,6 +95,28 @@ export class MdMenu implements AfterContentInit, MdMenuPanel, OnDestroy {
   /** Event emitted when the menu is closed. */
   @Output() close = new EventEmitter<void>();
 
+  ngAfterContentInit() {
+    this._keyManager = new FocusKeyManager(this.items).withWrap();
+    this._tabSubscription = this._keyManager.tabOut.subscribe(() => this._emitCloseEvent());
+  }
+
+  ngOnDestroy() {
+    if (this._tabSubscription) {
+      this._tabSubscription.unsubscribe();
+    }
+  }
+
+  /** Handle a keyboard event from the menu, delegating to the appropriate action. */
+  _handleKeydown(event: KeyboardEvent) {
+    switch (event.keyCode) {
+      case ESCAPE:
+        this._emitCloseEvent();
+        return;
+      default:
+        this._keyManager.onKeydown(event);
+    }
+  }
+
   /**
    * Focus the first item in the menu. This method is used by the menu trigger
    * to focus the first item when the menu is opened by the ENTER key.
diff --git a/src/lib/menu/menu.html b/src/lib/menu/menu.html
index 989bf1f56acb..10972059e8c5 100644
--- a/src/lib/menu/menu.html
+++ b/src/lib/menu/menu.html
@@ -1,5 +1,5 @@
 <ng-template>
-  <div class="mat-menu-panel" [ngClass]="_classList" (keydown)="_keyManager.onKeydown($event)"
+  <div class="mat-menu-panel" [ngClass]="_classList" (keydown)="_handleKeydown($event)"
     (click)="_emitCloseEvent()" [@transformMenu]="'showing'">
     <div class="mat-menu-content" [@fadeInItems]="'showing'">
       <ng-content></ng-content>
diff --git a/src/lib/menu/menu.spec.ts b/src/lib/menu/menu.spec.ts
index 4f5c79ed2b79..18e327753363 100644
--- a/src/lib/menu/menu.spec.ts
+++ b/src/lib/menu/menu.spec.ts
@@ -18,9 +18,11 @@ import {
   MenuPositionY
 } from './index';
 import {OverlayContainer} from '../core/overlay/overlay-container';
-import {ViewportRuler} from '../core/overlay/position/viewport-ruler';
 import {Dir, LayoutDirection} from '../core/rtl/dir';
 import {extendObject} from '../core/util/object-extend';
+import {ESCAPE} from '../core/keyboard/keycodes';
+import {dispatchKeyboardEvent} from '../core/testing/dispatch-events';
+
 
 describe('MdMenu', () => {
   let overlayContainerElement: HTMLElement;
@@ -80,6 +82,18 @@ describe('MdMenu', () => {
     expect(overlayContainerElement.textContent).toBe('');
   });
 
+  it('should close the menu when pressing escape', () => {
+    const fixture = TestBed.createComponent(SimpleMenu);
+    fixture.detectChanges();
+    fixture.componentInstance.trigger.openMenu();
+
+    const panel = overlayContainerElement.querySelector('.mat-menu-panel');
+    dispatchKeyboardEvent(panel, 'keydown', ESCAPE);
+    fixture.detectChanges();
+
+    expect(overlayContainerElement.textContent).toBe('');
+  });
+
   it('should open a custom menu', () => {
     const fixture = TestBed.createComponent(CustomMenu);
     fixture.detectChanges();