diff --git a/actionpack/lib/action_controller/routing/builder.rb b/actionpack/lib/action_controller/routing/builder.rb
index 5704d9d..c0c11fd 100644
--- a/actionpack/lib/action_controller/routing/builder.rb
+++ b/actionpack/lib/action_controller/routing/builder.rb
@@ -26,11 +26,11 @@ module ActionController
       # to be set separately, via the +assign_route_options+ method, and the
       # <tt>optional?</tt> method for each segment will not be reliable until after
       # +assign_route_options+ is called, as well.
-      def segments_for_route_path(path)
+      def segments_for_route_path(path, options = {})
         rest, segments = path, []
 
         until rest.empty?
-          segment, rest = segment_for rest
+          segment, rest = segment_for rest, options
           segments << segment
         end
         segments
@@ -38,12 +38,12 @@ module ActionController
 
       # A factory method that returns a new segment instance appropriate for the
       # format of the given string.
-      def segment_for(string)
+      def segment_for(string, options = {})
         segment = case string
           when /\A:(\w+)/
             key = $1.to_sym
             case key
-              when :controller then ControllerSegment.new(key)
+              when :controller then ControllerSegment.new(key, options)
               else DynamicSegment.new key
             end
           when /\A\*(\w+)/ then PathSegment.new($1.to_sym, :optional => true)
@@ -63,7 +63,7 @@ module ActionController
         options = options.dup
 
         if options[:namespace]
-          options[:controller] = "#{options.delete(:namespace).sub(/\/$/, '')}/#{options[:controller]}"
+          options[:controller] = "#{options.delete(:namespace).sub(/\/$/, '')}/#{options[:controller]}" if options[:controller]
           options.delete(:path_prefix)
           options.delete(:name_prefix)
         end
@@ -168,7 +168,7 @@ module ActionController
 
         path = "/#{options[:path_prefix].to_s.gsub(/^\//,'')}#{path}" if options[:path_prefix]
 
-        segments = segments_for_route_path(path)
+        segments = segments_for_route_path(path, options)
         defaults, requirements, conditions = divide_route_options(segments, options)
         requirements = assign_route_options(segments, defaults, requirements)
 
diff --git a/actionpack/lib/action_controller/routing/route.rb b/actionpack/lib/action_controller/routing/route.rb
index 3b2cb28..151246a 100644
--- a/actionpack/lib/action_controller/routing/route.rb
+++ b/actionpack/lib/action_controller/routing/route.rb
@@ -187,7 +187,10 @@ module ActionController
         # Write and compile a +recognize+ method for this Route.
         def write_recognition!
           # Create an if structure to extract the params from a match if it occurs.
-          body = "params = parameter_shell.dup\n#{recognition_extraction * "\n"}\nparams"
+          body = "params = parameter_shell.dup\n#{recognition_extraction * "\n"}\n"
+          body << "params[:namespace] = '#{requirements[:namespace]}' if params[:controller]\n" if requirements[:namespace]
+          body << "params"
+
           body = "if #{recognition_conditions.join(" && ")}\n#{body}\nend"
 
           # Build the method declaration and compile it
diff --git a/actionpack/lib/action_controller/routing/route_set.rb b/actionpack/lib/action_controller/routing/route_set.rb
index ff44849..675d5a1 100644
--- a/actionpack/lib/action_controller/routing/route_set.rb
+++ b/actionpack/lib/action_controller/routing/route_set.rb
@@ -384,7 +384,12 @@ module ActionController
       def recognize(request)
         params = recognize_path(request.path, extract_request_environment(request))
         request.path_parameters = params.with_indifferent_access
-        "#{params[:controller].camelize}Controller".constantize
+      
+        controller = params[:controller]
+        if params[:namespace]
+          controller = params[:namespace] + controller unless controller.start_with? params[:namespace]
+        end
+        "#{controller.camelize}Controller".constantize
       end
 
       def recognize_path(path, environment={})
diff --git a/actionpack/lib/action_controller/routing/segments.rb b/actionpack/lib/action_controller/routing/segments.rb
index e5f174a..18421cb 100644
--- a/actionpack/lib/action_controller/routing/segments.rb
+++ b/actionpack/lib/action_controller/routing/segments.rb
@@ -114,7 +114,7 @@ module ActionController
       attr_reader :key
 
       # TODO: Convert these accessors to read only
-      attr_accessor :default, :regexp
+      attr_accessor :default, :regexp, :namespace
 
       def initialize(key = nil, options = {})
         super()
@@ -122,6 +122,7 @@ module ActionController
         @default = options[:default] if options.key?(:default)
         @regexp = options[:regexp] if options.key?(:regexp)
         @is_optional = true if options[:optional] || options.key?(:default)
+        @namespace = options.key?(:namespace) ? options[:namespace] : nil
       end
 
       def to_s
@@ -227,6 +228,17 @@ module ActionController
     class ControllerSegment < DynamicSegment #:nodoc:
       def regexp_chunk
         possible_names = Routing.possible_controllers.collect { |name| Regexp.escape name }
+        
+        if namespace
+          namespaced_names = []
+          possible_names.each do |name|
+            if name.start_with? namespace
+              namespaced_names << name.gsub(/^#{namespace}[\/]?/, '') 
+            end 
+          end
+          possible_names = possible_names | namespaced_names
+        end
+
         "(?i-:(#{(regexp || Regexp.union(*possible_names)).source}))"
       end
 
diff --git a/actionpack/test/controller/routing_test.rb b/actionpack/test/controller/routing_test.rb
index 1eb26a7..24ed258 100644
--- a/actionpack/test/controller/routing_test.rb
+++ b/actionpack/test/controller/routing_test.rb
@@ -2089,6 +2089,27 @@ uses_mocha 'LegacyRouteSet, Route, RouteSet and RouteLoading' do
     ensure
       Object.send(:remove_const, :Api)
     end
+    
+    def test_namespaced_defaults
+      Object.const_set(:Api, Module.new { |m| m.const_set(:ProductsController, Class.new) })
+      request.method = :get
+      
+      ActionController::Routing.with_controllers(['api/products']) do
+        set.draw do |map|
+          map.namespace 'api' do |api|
+            api.connect ':controller/:action/:id'
+          end
+        end
+      
+        request.path = "/api/products/index"
+        assert_nothing_raised { set.recognize(request) }
+        request.path = "/api/products/show/1"
+        assert_nothing_raised { set.recognize(request) }
+      end
+    ensure
+      Object.send(:remove_const, :Api)
+    end
+
 
     def test_generate_finds_best_fit
       set.draw do |map|