diff --git a/pkg/scheduler/api/latest/BUILD b/pkg/scheduler/api/latest/BUILD
index 97cf4626bcf..65b4db771a0 100644
--- a/pkg/scheduler/api/latest/BUILD
+++ b/pkg/scheduler/api/latest/BUILD
@@ -16,6 +16,7 @@ go_library(
         "//staging/src/k8s.io/apimachinery/pkg/runtime/schema:go_default_library",
         "//staging/src/k8s.io/apimachinery/pkg/runtime/serializer/json:go_default_library",
         "//staging/src/k8s.io/apimachinery/pkg/runtime/serializer/versioning:go_default_library",
+        "//staging/src/k8s.io/apimachinery/pkg/runtime/serializer/yaml:go_default_library",
     ],
 )
 
diff --git a/pkg/scheduler/api/latest/latest.go b/pkg/scheduler/api/latest/latest.go
index 97696d57be1..f4a4ff7adcf 100644
--- a/pkg/scheduler/api/latest/latest.go
+++ b/pkg/scheduler/api/latest/latest.go
@@ -21,6 +21,7 @@ import (
 	"k8s.io/apimachinery/pkg/runtime/schema"
 	"k8s.io/apimachinery/pkg/runtime/serializer/json"
 	"k8s.io/apimachinery/pkg/runtime/serializer/versioning"
+	"k8s.io/apimachinery/pkg/runtime/serializer/yaml"
 	schedulerapi "k8s.io/kubernetes/pkg/scheduler/api"
 	// Init the api v1 package
 	_ "k8s.io/kubernetes/pkg/scheduler/api/v1"
@@ -44,10 +45,11 @@ var Codec runtime.Codec
 
 func init() {
 	jsonSerializer := json.NewSerializer(json.DefaultMetaFactory, schedulerapi.Scheme, schedulerapi.Scheme, true)
+	serializer := yaml.NewDecodingSerializer(jsonSerializer)
 	Codec = versioning.NewDefaultingCodecForScheme(
 		schedulerapi.Scheme,
-		jsonSerializer,
-		jsonSerializer,
+		serializer,
+		serializer,
 		schema.GroupVersion{Version: Version},
 		runtime.InternalGroupVersioner,
 	)
diff --git a/pkg/scheduler/scheduler_test.go b/pkg/scheduler/scheduler_test.go
index 79573265c6b..86e187ba46d 100644
--- a/pkg/scheduler/scheduler_test.go
+++ b/pkg/scheduler/scheduler_test.go
@@ -19,6 +19,9 @@ package scheduler
 import (
 	"errors"
 	"fmt"
+	"io/ioutil"
+	"os"
+	"path"
 	"reflect"
 	"testing"
 	"time"
@@ -43,6 +46,7 @@ import (
 	"k8s.io/kubernetes/pkg/scheduler/algorithm/predicates"
 	"k8s.io/kubernetes/pkg/scheduler/algorithm/priorities"
 	"k8s.io/kubernetes/pkg/scheduler/api"
+	schedulerapi "k8s.io/kubernetes/pkg/scheduler/api"
 	kubeschedulerconfig "k8s.io/kubernetes/pkg/scheduler/apis/config"
 	"k8s.io/kubernetes/pkg/scheduler/core"
 	"k8s.io/kubernetes/pkg/scheduler/factory"
@@ -935,3 +939,92 @@ func TestSchedulerWithVolumeBinding(t *testing.T) {
 		})
 	}
 }
+
+func TestInitPolicyFromFile(t *testing.T) {
+	dir, err := ioutil.TempDir(os.TempDir(), "policy")
+	if err != nil {
+		t.Errorf("unexpected error: %v", err)
+	}
+	defer os.RemoveAll(dir)
+
+	for i, test := range []struct {
+		policy               string
+		expectedPredicates   sets.String
+		expectedPrioritizers sets.String
+	}{
+		// Test json format policy file
+		{
+			policy: `{
+				"kind" : "Policy",
+				"apiVersion" : "v1",
+				"predicates" : [
+					{"name" : "PredicateOne"},
+					{"name" : "PredicateTwo"}
+				],
+				"priorities" : [
+					{"name" : "PriorityOne", "weight" : 1},
+					{"name" : "PriorityTwo", "weight" : 5}
+				]
+			}`,
+			expectedPredicates: sets.NewString(
+				"PredicateOne",
+				"PredicateTwo",
+			),
+			expectedPrioritizers: sets.NewString(
+				"PriorityOne",
+				"PriorityTwo",
+			),
+		},
+		// Test yaml format policy file
+		{
+			policy: `apiVersion: v1
+kind: Policy
+predicates:
+- name: PredicateOne
+- name: PredicateTwo
+priorities:
+- name: PriorityOne
+  weight: 1
+- name: PriorityTwo
+  weight: 5
+`,
+			expectedPredicates: sets.NewString(
+				"PredicateOne",
+				"PredicateTwo",
+			),
+			expectedPrioritizers: sets.NewString(
+				"PriorityOne",
+				"PriorityTwo",
+			),
+		},
+	} {
+		file := fmt.Sprintf("scheduler-policy-config-file-%d", i)
+		fullPath := path.Join(dir, file)
+
+		if err := ioutil.WriteFile(fullPath, []byte(test.policy), 0644); err != nil {
+			t.Fatalf("Failed writing a policy config file: %v", err)
+		}
+
+		policy := &schedulerapi.Policy{}
+
+		if err := initPolicyFromFile(fullPath, policy); err != nil {
+			t.Fatalf("Failed writing a policy config file: %v", err)
+		}
+
+		// Verify that the policy is initialized correctly.
+		schedPredicates := sets.NewString()
+		for _, p := range policy.Predicates {
+			schedPredicates.Insert(p.Name)
+		}
+		schedPrioritizers := sets.NewString()
+		for _, p := range policy.Priorities {
+			schedPrioritizers.Insert(p.Name)
+		}
+		if !schedPredicates.Equal(test.expectedPredicates) {
+			t.Errorf("Expected predicates %v, got %v", test.expectedPredicates, schedPredicates)
+		}
+		if !schedPrioritizers.Equal(test.expectedPrioritizers) {
+			t.Errorf("Expected priority functions %v, got %v", test.expectedPrioritizers, schedPrioritizers)
+		}
+	}
+}
diff --git a/test/integration/scheduler/scheduler_test.go b/test/integration/scheduler/scheduler_test.go
index 4970294264e..6de176b1d46 100644
--- a/test/integration/scheduler/scheduler_test.go
+++ b/test/integration/scheduler/scheduler_test.go
@@ -162,6 +162,70 @@ func TestSchedulerCreationFromConfigMap(t *testing.T) {
 			),
 			expectedPrioritizers: sets.NewString(),
 		},
+		{
+			policy: `apiVersion: v1
+kind: Policy
+predicates:
+- name: PredicateOne
+- name: PredicateTwo
+priorities:
+- name: PriorityOne
+  weight: 1
+- name: PriorityTwo
+  weight: 5
+`,
+			expectedPredicates: sets.NewString(
+				"CheckNodeCondition", // mandatory predicate
+				"PredicateOne",
+				"PredicateTwo",
+			),
+			expectedPrioritizers: sets.NewString(
+				"PriorityOne",
+				"PriorityTwo",
+			),
+		},
+		{
+			policy: `apiVersion: v1
+kind: Policy
+`,
+			expectedPredicates: sets.NewString(
+				"CheckNodeCondition", // mandatory predicate
+				"CheckNodeDiskPressure",
+				"CheckNodeMemoryPressure",
+				"CheckNodePIDPressure",
+				"CheckVolumeBinding",
+				"GeneralPredicates",
+				"MatchInterPodAffinity",
+				"MaxAzureDiskVolumeCount",
+				"MaxCSIVolumeCountPred",
+				"MaxEBSVolumeCount",
+				"MaxGCEPDVolumeCount",
+				"NoDiskConflict",
+				"NoVolumeZoneConflict",
+				"PodToleratesNodeTaints",
+			),
+			expectedPrioritizers: sets.NewString(
+				"BalancedResourceAllocation",
+				"InterPodAffinityPriority",
+				"LeastRequestedPriority",
+				"NodeAffinityPriority",
+				"NodePreferAvoidPodsPriority",
+				"SelectorSpreadPriority",
+				"TaintTolerationPriority",
+				"ImageLocalityPriority",
+			),
+		},
+		{
+			policy: `apiVersion: v1
+kind: Policy
+predicates: []
+priorities: []
+`,
+			expectedPredicates: sets.NewString(
+				"CheckNodeCondition", // mandatory predicate
+			),
+			expectedPrioritizers: sets.NewString(),
+		},
 	} {
 		// Add a ConfigMap object.
 		configPolicyName := fmt.Sprintf("scheduler-custom-policy-config-%d", i)