diff --git a/pkg/controller/replicaset/replica_set.go b/pkg/controller/replicaset/replica_set.go
index 7624e9c8c76..d7b36463afa 100644
--- a/pkg/controller/replicaset/replica_set.go
+++ b/pkg/controller/replicaset/replica_set.go
@@ -618,36 +618,10 @@ func (rsc *ReplicaSetController) syncReplicaSet(key string) error {
 		manageReplicasErr = rsc.manageReplicas(filteredPods, &rs)
 	}
 
-	// Count the number of pods that have labels matching the labels of the pod
-	// template of the replicaSet, the matching pods may have more labels than
-	// are in the template. Because the label of podTemplateSpec is a superset
-	// of the selector of the replicaset, so the possible matching pods must be
-	// part of the filteredPods.
-	fullyLabeledReplicasCount := 0
-	readyReplicasCount := 0
-	availableReplicasCount := 0
-	templateLabel := labels.Set(rs.Spec.Template.Labels).AsSelectorPreValidated()
-	for _, pod := range filteredPods {
-		if templateLabel.Matches(labels.Set(pod.Labels)) {
-			fullyLabeledReplicasCount++
-		}
-		if api.IsPodReady(pod) {
-			readyReplicasCount++
-			if api.IsPodAvailable(pod, rs.Spec.MinReadySeconds, unversioned.Now()) {
-				availableReplicasCount++
-			}
-		}
-	}
+	newStatus := calculateStatus(rs, filteredPods, manageReplicasErr)
 
 	// Always updates status as pods come up or die.
-	if err := updateReplicaCount(
-		rsc.kubeClient.Extensions().ReplicaSets(rs.Namespace),
-		rs,
-		len(filteredPods),
-		fullyLabeledReplicasCount,
-		readyReplicasCount,
-		availableReplicasCount,
-	); err != nil {
+	if err := updateReplicaSetStatus(rsc.kubeClient.Extensions().ReplicaSets(rs.Namespace), rs, newStatus); err != nil {
 		// Multiple things could lead to this update failing. Requeuing the replica set ensures
 		// Returning an error causes a requeue without forcing a hotloop
 		return err
diff --git a/pkg/controller/replicaset/replica_set_test.go b/pkg/controller/replicaset/replica_set_test.go
index c70bed3f36e..4b12b165b67 100644
--- a/pkg/controller/replicaset/replica_set_test.go
+++ b/pkg/controller/replicaset/replica_set_test.go
@@ -23,6 +23,7 @@ import (
 	"math/rand"
 	"net/http/httptest"
 	"net/url"
+	"reflect"
 	"strings"
 	"testing"
 	"time"
@@ -386,6 +387,7 @@ func TestSyncReplicaSetDormancy(t *testing.T) {
 		StatusCode:    200,
 		ResponseBody:  "{}",
 		SkipRequestFn: skipListerFunc,
+		T:             t,
 	}
 	testServer := httptest.NewServer(&fakeHandler)
 	defer testServer.Close()
@@ -443,9 +445,9 @@ func TestSyncReplicaSetDormancy(t *testing.T) {
 	manager.syncReplicaSet(getKey(rsSpec, t))
 	validateSyncReplicaSet(t, &fakePodControl, 1, 0, 0)
 
-	// 1 PUT for the ReplicaSet status during dormancy window.
+	// 2 PUT for the ReplicaSet status during dormancy window.
 	// Note that the pod creates go through pod control so they're not recorded.
-	fakeHandler.ValidateRequestCount(t, 1)
+	fakeHandler.ValidateRequestCount(t, 2)
 }
 
 func TestPodControllerLookup(t *testing.T) {
@@ -715,8 +717,9 @@ func TestControllerUpdateStatusWithFailure(t *testing.T) {
 		return true, &extensions.ReplicaSet{}, fmt.Errorf("Fake error")
 	})
 	fakeRSClient := fakeClient.Extensions().ReplicaSets("default")
-	numReplicas := 10
-	updateReplicaCount(fakeRSClient, *rs, numReplicas, 0, 0, 0)
+	numReplicas := int32(10)
+	newStatus := extensions.ReplicaSetStatus{Replicas: numReplicas}
+	updateReplicaSetStatus(fakeRSClient, *rs, newStatus)
 	updates, gets := 0, 0
 	for _, a := range fakeClient.Actions() {
 		if a.GetResource().Resource != "replicasets" {
@@ -737,7 +740,7 @@ func TestControllerUpdateStatusWithFailure(t *testing.T) {
 			// returned a ReplicaSet with replicas=1.
 			if c, ok := action.GetObject().(*extensions.ReplicaSet); !ok {
 				t.Errorf("Expected a ReplicaSet as the argument to update, got %T", c)
-			} else if int(c.Status.Replicas) != numReplicas {
+			} else if c.Status.Replicas != numReplicas {
 				t.Errorf("Expected update for ReplicaSet to contain replicas %v, got %v instead",
 					numReplicas, c.Status.Replicas)
 			}
@@ -1430,3 +1433,163 @@ func TestAvailableReplicas(t *testing.T) {
 	fakeHandler.ValidateRequest(t, testapi.Extensions.ResourcePath(replicaSetResourceName(), rs.Namespace, rs.Name)+"/status", "PUT", &decRs)
 	validateSyncReplicaSet(t, &fakePodControl, 0, 0, 0)
 }
+
+var (
+	imagePullBackOff extensions.ReplicaSetConditionType = "ImagePullBackOff"
+
+	condImagePullBackOff = func() extensions.ReplicaSetCondition {
+		return extensions.ReplicaSetCondition{
+			Type:   imagePullBackOff,
+			Status: api.ConditionTrue,
+			Reason: "NonExistentImage",
+		}
+	}
+
+	condReplicaFailure = func() extensions.ReplicaSetCondition {
+		return extensions.ReplicaSetCondition{
+			Type:   extensions.ReplicaSetReplicaFailure,
+			Status: api.ConditionTrue,
+			Reason: "OtherFailure",
+		}
+	}
+
+	condReplicaFailure2 = func() extensions.ReplicaSetCondition {
+		return extensions.ReplicaSetCondition{
+			Type:   extensions.ReplicaSetReplicaFailure,
+			Status: api.ConditionTrue,
+			Reason: "AnotherFailure",
+		}
+	}
+
+	status = func() *extensions.ReplicaSetStatus {
+		return &extensions.ReplicaSetStatus{
+			Conditions: []extensions.ReplicaSetCondition{condReplicaFailure()},
+		}
+	}
+)
+
+func TestGetCondition(t *testing.T) {
+	exampleStatus := status()
+
+	tests := []struct {
+		name string
+
+		status     extensions.ReplicaSetStatus
+		condType   extensions.ReplicaSetConditionType
+		condStatus api.ConditionStatus
+		condReason string
+
+		expected bool
+	}{
+		{
+			name: "condition exists",
+
+			status:   *exampleStatus,
+			condType: extensions.ReplicaSetReplicaFailure,
+
+			expected: true,
+		},
+		{
+			name: "condition does not exist",
+
+			status:   *exampleStatus,
+			condType: imagePullBackOff,
+
+			expected: false,
+		},
+	}
+
+	for _, test := range tests {
+		cond := GetCondition(test.status, test.condType)
+		exists := cond != nil
+		if exists != test.expected {
+			t.Errorf("%s: expected condition to exist: %t, got: %t", test.name, test.expected, exists)
+		}
+	}
+}
+
+func TestSetCondition(t *testing.T) {
+	tests := []struct {
+		name string
+
+		status *extensions.ReplicaSetStatus
+		cond   extensions.ReplicaSetCondition
+
+		expectedStatus *extensions.ReplicaSetStatus
+	}{
+		{
+			name: "set for the first time",
+
+			status: &extensions.ReplicaSetStatus{},
+			cond:   condReplicaFailure(),
+
+			expectedStatus: &extensions.ReplicaSetStatus{Conditions: []extensions.ReplicaSetCondition{condReplicaFailure()}},
+		},
+		{
+			name: "simple set",
+
+			status: &extensions.ReplicaSetStatus{Conditions: []extensions.ReplicaSetCondition{condImagePullBackOff()}},
+			cond:   condReplicaFailure(),
+
+			expectedStatus: &extensions.ReplicaSetStatus{Conditions: []extensions.ReplicaSetCondition{condImagePullBackOff(), condReplicaFailure()}},
+		},
+		{
+			name: "overwrite",
+
+			status: &extensions.ReplicaSetStatus{Conditions: []extensions.ReplicaSetCondition{condReplicaFailure()}},
+			cond:   condReplicaFailure2(),
+
+			expectedStatus: &extensions.ReplicaSetStatus{Conditions: []extensions.ReplicaSetCondition{condReplicaFailure2()}},
+		},
+	}
+
+	for _, test := range tests {
+		SetCondition(test.status, test.cond)
+		if !reflect.DeepEqual(test.status, test.expectedStatus) {
+			t.Errorf("%s: expected status: %v, got: %v", test.name, test.expectedStatus, test.status)
+		}
+	}
+}
+
+func TestRemoveCondition(t *testing.T) {
+	tests := []struct {
+		name string
+
+		status   *extensions.ReplicaSetStatus
+		condType extensions.ReplicaSetConditionType
+
+		expectedStatus *extensions.ReplicaSetStatus
+	}{
+		{
+			name: "remove from empty status",
+
+			status:   &extensions.ReplicaSetStatus{},
+			condType: extensions.ReplicaSetReplicaFailure,
+
+			expectedStatus: &extensions.ReplicaSetStatus{},
+		},
+		{
+			name: "simple remove",
+
+			status:   &extensions.ReplicaSetStatus{Conditions: []extensions.ReplicaSetCondition{condReplicaFailure()}},
+			condType: extensions.ReplicaSetReplicaFailure,
+
+			expectedStatus: &extensions.ReplicaSetStatus{},
+		},
+		{
+			name: "doesn't remove anything",
+
+			status:   status(),
+			condType: imagePullBackOff,
+
+			expectedStatus: status(),
+		},
+	}
+
+	for _, test := range tests {
+		RemoveCondition(test.status, test.condType)
+		if !reflect.DeepEqual(test.status, test.expectedStatus) {
+			t.Errorf("%s: expected status: %v, got: %v", test.name, test.expectedStatus, test.status)
+		}
+	}
+}
diff --git a/pkg/controller/replicaset/replica_set_utils.go b/pkg/controller/replicaset/replica_set_utils.go
index 76a7c3608b5..1c20456b38a 100644
--- a/pkg/controller/replicaset/replica_set_utils.go
+++ b/pkg/controller/replicaset/replica_set_utils.go
@@ -20,24 +20,28 @@ package replicaset
 
 import (
 	"fmt"
+	"reflect"
 
 	"github.com/golang/glog"
 
 	"k8s.io/kubernetes/pkg/api"
+	"k8s.io/kubernetes/pkg/api/unversioned"
 	"k8s.io/kubernetes/pkg/apis/extensions"
 	unversionedextensions "k8s.io/kubernetes/pkg/client/clientset_generated/internalclientset/typed/extensions/internalversion"
+	"k8s.io/kubernetes/pkg/labels"
 )
 
-// updateReplicaCount attempts to update the Status.Replicas of the given ReplicaSet, with a single GET/PUT retry.
-func updateReplicaCount(rsClient unversionedextensions.ReplicaSetInterface, rs extensions.ReplicaSet, numReplicas, numFullyLabeledReplicas, numReadyReplicas, numAvailableReplicas int) (updateErr error) {
+// updateReplicaSetStatus attempts to update the Status.Replicas of the given ReplicaSet, with a single GET/PUT retry.
+func updateReplicaSetStatus(c unversionedextensions.ReplicaSetInterface, rs extensions.ReplicaSet, newStatus extensions.ReplicaSetStatus) (updateErr error) {
 	// This is the steady state. It happens when the ReplicaSet doesn't have any expectations, since
 	// we do a periodic relist every 30s. If the generations differ but the replicas are
 	// the same, a caller might've resized to the same replica count.
-	if int(rs.Status.Replicas) == numReplicas &&
-		int(rs.Status.FullyLabeledReplicas) == numFullyLabeledReplicas &&
-		int(rs.Status.ReadyReplicas) == numReadyReplicas &&
-		int(rs.Status.AvailableReplicas) == numAvailableReplicas &&
-		rs.Generation == rs.Status.ObservedGeneration {
+	if rs.Status.Replicas == newStatus.Replicas &&
+		rs.Status.FullyLabeledReplicas == newStatus.FullyLabeledReplicas &&
+		rs.Status.ReadyReplicas == newStatus.ReadyReplicas &&
+		rs.Status.AvailableReplicas == newStatus.AvailableReplicas &&
+		rs.Generation == rs.Status.ObservedGeneration &&
+		reflect.DeepEqual(rs.Status.Conditions, newStatus.Conditions) {
 		return nil
 	}
 
@@ -53,30 +57,24 @@ func updateReplicaCount(rsClient unversionedextensions.ReplicaSetInterface, rs e
 	// that we've seen a spec update when we retry.
 	// TODO: This can clobber an update if we allow multiple agents to write to the
 	// same status.
-	generation := rs.Generation
+	newStatus.ObservedGeneration = rs.Generation
 
 	var getErr error
 	for i, rs := 0, &rs; ; i++ {
 		glog.V(4).Infof(fmt.Sprintf("Updating replica count for ReplicaSet: %s/%s, ", rs.Namespace, rs.Name) +
-			fmt.Sprintf("replicas %d->%d (need %d), ", rs.Status.Replicas, numReplicas, rs.Spec.Replicas) +
-			fmt.Sprintf("fullyLabeledReplicas %d->%d, ", rs.Status.FullyLabeledReplicas, numFullyLabeledReplicas) +
-			fmt.Sprintf("readyReplicas %d->%d, ", rs.Status.ReadyReplicas, numReadyReplicas) +
-			fmt.Sprintf("availableReplicas %d->%d, ", rs.Status.AvailableReplicas, numAvailableReplicas) +
-			fmt.Sprintf("sequence No: %v->%v", rs.Status.ObservedGeneration, generation))
+			fmt.Sprintf("replicas %d->%d (need %d), ", rs.Status.Replicas, newStatus.Replicas, rs.Spec.Replicas) +
+			fmt.Sprintf("fullyLabeledReplicas %d->%d, ", rs.Status.FullyLabeledReplicas, newStatus.FullyLabeledReplicas) +
+			fmt.Sprintf("readyReplicas %d->%d, ", rs.Status.ReadyReplicas, newStatus.ReadyReplicas) +
+			fmt.Sprintf("availableReplicas %d->%d, ", rs.Status.AvailableReplicas, newStatus.AvailableReplicas) +
+			fmt.Sprintf("sequence No: %v->%v", rs.Status.ObservedGeneration, newStatus.ObservedGeneration))
 
-		rs.Status = extensions.ReplicaSetStatus{
-			Replicas:             int32(numReplicas),
-			FullyLabeledReplicas: int32(numFullyLabeledReplicas),
-			ReadyReplicas:        int32(numReadyReplicas),
-			AvailableReplicas:    int32(numAvailableReplicas),
-			ObservedGeneration:   generation,
-		}
-		_, updateErr = rsClient.UpdateStatus(rs)
+		rs.Status = newStatus
+		_, updateErr = c.UpdateStatus(rs)
 		if updateErr == nil || i >= statusUpdateRetries {
 			return updateErr
 		}
 		// Update the ReplicaSet with the latest resource version for the next poll
-		if rs, getErr = rsClient.Get(rs.Name); getErr != nil {
+		if rs, getErr = c.Get(rs.Name); getErr != nil {
 			// If the GET fails we can't trust status.Replicas anymore. This error
 			// is bound to be more interesting than the update failure.
 			return getErr
@@ -96,3 +94,97 @@ func (o overlappingReplicaSets) Less(i, j int) bool {
 	}
 	return o[i].CreationTimestamp.Before(o[j].CreationTimestamp)
 }
+
+func calculateStatus(rs extensions.ReplicaSet, filteredPods []*api.Pod, manageReplicasErr error) extensions.ReplicaSetStatus {
+	newStatus := rs.Status
+	// Count the number of pods that have labels matching the labels of the pod
+	// template of the replica set, the matching pods may have more
+	// labels than are in the template. Because the label of podTemplateSpec is
+	// a superset of the selector of the replica set, so the possible
+	// matching pods must be part of the filteredPods.
+	fullyLabeledReplicasCount := 0
+	readyReplicasCount := 0
+	availableReplicasCount := 0
+	templateLabel := labels.Set(rs.Spec.Template.Labels).AsSelectorPreValidated()
+	for _, pod := range filteredPods {
+		if templateLabel.Matches(labels.Set(pod.Labels)) {
+			fullyLabeledReplicasCount++
+		}
+		if api.IsPodReady(pod) {
+			readyReplicasCount++
+			if api.IsPodAvailable(pod, rs.Spec.MinReadySeconds, unversioned.Now()) {
+				availableReplicasCount++
+			}
+		}
+	}
+
+	failureCond := GetCondition(rs.Status, extensions.ReplicaSetReplicaFailure)
+	if manageReplicasErr != nil && failureCond == nil {
+		var reason string
+		if diff := len(filteredPods) - int(rs.Spec.Replicas); diff < 0 {
+			reason = "FailedCreate"
+		} else if diff > 0 {
+			reason = "FailedDelete"
+		}
+		cond := NewReplicaSetCondition(extensions.ReplicaSetReplicaFailure, api.ConditionTrue, reason, manageReplicasErr.Error())
+		SetCondition(&newStatus, cond)
+	} else if manageReplicasErr == nil && failureCond != nil {
+		RemoveCondition(&newStatus, extensions.ReplicaSetReplicaFailure)
+	}
+
+	newStatus.Replicas = int32(len(filteredPods))
+	newStatus.FullyLabeledReplicas = int32(fullyLabeledReplicasCount)
+	newStatus.ReadyReplicas = int32(readyReplicasCount)
+	newStatus.AvailableReplicas = int32(availableReplicasCount)
+	return newStatus
+}
+
+// NewReplicaSetCondition creates a new replica set condition.
+func NewReplicaSetCondition(condType extensions.ReplicaSetConditionType, status api.ConditionStatus, reason, msg string) extensions.ReplicaSetCondition {
+	return extensions.ReplicaSetCondition{
+		Type:               condType,
+		Status:             status,
+		LastTransitionTime: unversioned.Now(),
+		Reason:             reason,
+		Message:            msg,
+	}
+}
+
+// GetCondition returns a replica set condition with the provided type if it exists.
+func GetCondition(status extensions.ReplicaSetStatus, condType extensions.ReplicaSetConditionType) *extensions.ReplicaSetCondition {
+	for i := range status.Conditions {
+		c := status.Conditions[i]
+		if c.Type == condType {
+			return &c
+		}
+	}
+	return nil
+}
+
+// SetCondition adds/replaces the given condition in the replica set status. If the condition that we
+// are about to add already exists and has the same status and reason then we are not going to update.
+func SetCondition(status *extensions.ReplicaSetStatus, condition extensions.ReplicaSetCondition) {
+	currentCond := GetCondition(*status, condition.Type)
+	if currentCond != nil && currentCond.Status == condition.Status && currentCond.Reason == condition.Reason {
+		return
+	}
+	newConditions := filterOutCondition(status.Conditions, condition.Type)
+	status.Conditions = append(newConditions, condition)
+}
+
+// RemoveCondition removes the condition with the provided type from the replica set status.
+func RemoveCondition(status *extensions.ReplicaSetStatus, condType extensions.ReplicaSetConditionType) {
+	status.Conditions = filterOutCondition(status.Conditions, condType)
+}
+
+// filterOutCondition returns a new slice of replica set conditions without conditions with the provided type.
+func filterOutCondition(conditions []extensions.ReplicaSetCondition, condType extensions.ReplicaSetConditionType) []extensions.ReplicaSetCondition {
+	var newConditions []extensions.ReplicaSetCondition
+	for _, c := range conditions {
+		if c.Type == condType {
+			continue
+		}
+		newConditions = append(newConditions, c)
+	}
+	return newConditions
+}
diff --git a/pkg/controller/replication/replication_controller.go b/pkg/controller/replication/replication_controller.go
index 3a6223863fe..31bf816f227 100644
--- a/pkg/controller/replication/replication_controller.go
+++ b/pkg/controller/replication/replication_controller.go
@@ -710,36 +710,10 @@ func (rm *ReplicationManager) syncReplicationController(key string) error {
 	}
 	trace.Step("manageReplicas done")
 
-	// Count the number of pods that have labels matching the labels of the pod
-	// template of the replication controller, the matching pods may have more
-	// labels than are in the template. Because the label of podTemplateSpec is
-	// a superset of the selector of the replication controller, so the possible
-	// matching pods must be part of the filteredPods.
-	fullyLabeledReplicasCount := 0
-	readyReplicasCount := 0
-	availableReplicasCount := 0
-	templateLabel := labels.Set(rc.Spec.Template.Labels).AsSelectorPreValidated()
-	for _, pod := range filteredPods {
-		if templateLabel.Matches(labels.Set(pod.Labels)) {
-			fullyLabeledReplicasCount++
-		}
-		if api.IsPodReady(pod) {
-			readyReplicasCount++
-			if api.IsPodAvailable(pod, rc.Spec.MinReadySeconds, unversioned.Now()) {
-				availableReplicasCount++
-			}
-		}
-	}
+	newStatus := calculateStatus(rc, filteredPods, manageReplicasErr)
 
 	// Always updates status as pods come up or die.
-	if err := updateReplicaCount(
-		rm.kubeClient.Core().ReplicationControllers(rc.Namespace),
-		rc,
-		len(filteredPods),
-		fullyLabeledReplicasCount,
-		readyReplicasCount,
-		availableReplicasCount,
-	); err != nil {
+	if err := updateReplicationControllerStatus(rm.kubeClient.Core().ReplicationControllers(rc.Namespace), rc, newStatus); err != nil {
 		// Multiple things could lead to this update failing.  Returning an error causes a requeue without forcing a hotloop
 		return err
 	}
diff --git a/pkg/controller/replication/replication_controller_test.go b/pkg/controller/replication/replication_controller_test.go
index b6ed84005b6..f1620a153d4 100644
--- a/pkg/controller/replication/replication_controller_test.go
+++ b/pkg/controller/replication/replication_controller_test.go
@@ -22,6 +22,7 @@ import (
 	"fmt"
 	"math/rand"
 	"net/http/httptest"
+	"reflect"
 	"strings"
 	"testing"
 	"time"
@@ -326,6 +327,7 @@ func TestSyncReplicationControllerDormancy(t *testing.T) {
 	fakeHandler := utiltesting.FakeHandler{
 		StatusCode:   200,
 		ResponseBody: "{}",
+		T:            t,
 	}
 	testServer := httptest.NewServer(&fakeHandler)
 	defer testServer.Close()
@@ -378,9 +380,9 @@ func TestSyncReplicationControllerDormancy(t *testing.T) {
 	manager.syncReplicationController(getKey(controllerSpec, t))
 	validateSyncReplication(t, &fakePodControl, 1, 0, 0)
 
-	// 1 PUT for the rc status during dormancy window.
+	// 2 PUT for the rc status during dormancy window.
 	// Note that the pod creates go through pod control so they're not recorded.
-	fakeHandler.ValidateRequestCount(t, 1)
+	fakeHandler.ValidateRequestCount(t, 2)
 }
 
 func TestPodControllerLookup(t *testing.T) {
@@ -641,8 +643,9 @@ func TestControllerUpdateStatusWithFailure(t *testing.T) {
 		return true, &api.ReplicationController{}, fmt.Errorf("Fake error")
 	})
 	fakeRCClient := c.Core().ReplicationControllers("default")
-	numReplicas := 10
-	updateReplicaCount(fakeRCClient, *rc, numReplicas, 0, 0, 0)
+	numReplicas := int32(10)
+	status := api.ReplicationControllerStatus{Replicas: numReplicas}
+	updateReplicationControllerStatus(fakeRCClient, *rc, status)
 	updates, gets := 0, 0
 	for _, a := range c.Actions() {
 		if a.GetResource().Resource != "replicationcontrollers" {
@@ -663,7 +666,7 @@ func TestControllerUpdateStatusWithFailure(t *testing.T) {
 			// returned an rc with replicas=1.
 			if c, ok := action.GetObject().(*api.ReplicationController); !ok {
 				t.Errorf("Expected an rc as the argument to update, got %T", c)
-			} else if c.Status.Replicas != int32(numReplicas) {
+			} else if c.Status.Replicas != numReplicas {
 				t.Errorf("Expected update for rc to contain replicas %v, got %v instead",
 					numReplicas, c.Status.Replicas)
 			}
@@ -1417,3 +1420,163 @@ func TestAvailableReplicas(t *testing.T) {
 	fakeHandler.ValidateRequest(t, testapi.Default.ResourcePath(replicationControllerResourceName(), rc.Namespace, rc.Name)+"/status", "PUT", &decRc)
 	validateSyncReplication(t, &fakePodControl, 0, 0, 0)
 }
+
+var (
+	imagePullBackOff api.ReplicationControllerConditionType = "ImagePullBackOff"
+
+	condImagePullBackOff = func() api.ReplicationControllerCondition {
+		return api.ReplicationControllerCondition{
+			Type:   imagePullBackOff,
+			Status: api.ConditionTrue,
+			Reason: "NonExistentImage",
+		}
+	}
+
+	condReplicaFailure = func() api.ReplicationControllerCondition {
+		return api.ReplicationControllerCondition{
+			Type:   api.ReplicationControllerReplicaFailure,
+			Status: api.ConditionTrue,
+			Reason: "OtherFailure",
+		}
+	}
+
+	condReplicaFailure2 = func() api.ReplicationControllerCondition {
+		return api.ReplicationControllerCondition{
+			Type:   api.ReplicationControllerReplicaFailure,
+			Status: api.ConditionTrue,
+			Reason: "AnotherFailure",
+		}
+	}
+
+	status = func() *api.ReplicationControllerStatus {
+		return &api.ReplicationControllerStatus{
+			Conditions: []api.ReplicationControllerCondition{condReplicaFailure()},
+		}
+	}
+)
+
+func TestGetCondition(t *testing.T) {
+	exampleStatus := status()
+
+	tests := []struct {
+		name string
+
+		status     api.ReplicationControllerStatus
+		condType   api.ReplicationControllerConditionType
+		condStatus api.ConditionStatus
+		condReason string
+
+		expected bool
+	}{
+		{
+			name: "condition exists",
+
+			status:   *exampleStatus,
+			condType: api.ReplicationControllerReplicaFailure,
+
+			expected: true,
+		},
+		{
+			name: "condition does not exist",
+
+			status:   *exampleStatus,
+			condType: imagePullBackOff,
+
+			expected: false,
+		},
+	}
+
+	for _, test := range tests {
+		cond := GetCondition(test.status, test.condType)
+		exists := cond != nil
+		if exists != test.expected {
+			t.Errorf("%s: expected condition to exist: %t, got: %t", test.name, test.expected, exists)
+		}
+	}
+}
+
+func TestSetCondition(t *testing.T) {
+	tests := []struct {
+		name string
+
+		status *api.ReplicationControllerStatus
+		cond   api.ReplicationControllerCondition
+
+		expectedStatus *api.ReplicationControllerStatus
+	}{
+		{
+			name: "set for the first time",
+
+			status: &api.ReplicationControllerStatus{},
+			cond:   condReplicaFailure(),
+
+			expectedStatus: &api.ReplicationControllerStatus{Conditions: []api.ReplicationControllerCondition{condReplicaFailure()}},
+		},
+		{
+			name: "simple set",
+
+			status: &api.ReplicationControllerStatus{Conditions: []api.ReplicationControllerCondition{condImagePullBackOff()}},
+			cond:   condReplicaFailure(),
+
+			expectedStatus: &api.ReplicationControllerStatus{Conditions: []api.ReplicationControllerCondition{condImagePullBackOff(), condReplicaFailure()}},
+		},
+		{
+			name: "overwrite",
+
+			status: &api.ReplicationControllerStatus{Conditions: []api.ReplicationControllerCondition{condReplicaFailure()}},
+			cond:   condReplicaFailure2(),
+
+			expectedStatus: &api.ReplicationControllerStatus{Conditions: []api.ReplicationControllerCondition{condReplicaFailure2()}},
+		},
+	}
+
+	for _, test := range tests {
+		SetCondition(test.status, test.cond)
+		if !reflect.DeepEqual(test.status, test.expectedStatus) {
+			t.Errorf("%s: expected status: %v, got: %v", test.name, test.expectedStatus, test.status)
+		}
+	}
+}
+
+func TestRemoveCondition(t *testing.T) {
+	tests := []struct {
+		name string
+
+		status   *api.ReplicationControllerStatus
+		condType api.ReplicationControllerConditionType
+
+		expectedStatus *api.ReplicationControllerStatus
+	}{
+		{
+			name: "remove from empty status",
+
+			status:   &api.ReplicationControllerStatus{},
+			condType: api.ReplicationControllerReplicaFailure,
+
+			expectedStatus: &api.ReplicationControllerStatus{},
+		},
+		{
+			name: "simple remove",
+
+			status:   &api.ReplicationControllerStatus{Conditions: []api.ReplicationControllerCondition{condReplicaFailure()}},
+			condType: api.ReplicationControllerReplicaFailure,
+
+			expectedStatus: &api.ReplicationControllerStatus{},
+		},
+		{
+			name: "doesn't remove anything",
+
+			status:   status(),
+			condType: imagePullBackOff,
+
+			expectedStatus: status(),
+		},
+	}
+
+	for _, test := range tests {
+		RemoveCondition(test.status, test.condType)
+		if !reflect.DeepEqual(test.status, test.expectedStatus) {
+			t.Errorf("%s: expected status: %v, got: %v", test.name, test.expectedStatus, test.status)
+		}
+	}
+}
diff --git a/pkg/controller/replication/replication_controller_utils.go b/pkg/controller/replication/replication_controller_utils.go
index 2cffb5e32da..0fbd425288d 100644
--- a/pkg/controller/replication/replication_controller_utils.go
+++ b/pkg/controller/replication/replication_controller_utils.go
@@ -20,52 +20,50 @@ package replication
 
 import (
 	"fmt"
+	"reflect"
 
 	"github.com/golang/glog"
 	"k8s.io/kubernetes/pkg/api"
+	"k8s.io/kubernetes/pkg/api/unversioned"
 	unversionedcore "k8s.io/kubernetes/pkg/client/clientset_generated/internalclientset/typed/core/internalversion"
+	"k8s.io/kubernetes/pkg/labels"
 )
 
-// updateReplicaCount attempts to update the Status.Replicas of the given controller, with a single GET/PUT retry.
-func updateReplicaCount(rcClient unversionedcore.ReplicationControllerInterface, controller api.ReplicationController, numReplicas, numFullyLabeledReplicas, numReadyReplicas, numAvailableReplicas int) (updateErr error) {
+// updateReplicationControllerStatus attempts to update the Status.Replicas of the given controller, with a single GET/PUT retry.
+func updateReplicationControllerStatus(c unversionedcore.ReplicationControllerInterface, rc api.ReplicationController, newStatus api.ReplicationControllerStatus) (updateErr error) {
 	// This is the steady state. It happens when the rc doesn't have any expectations, since
 	// we do a periodic relist every 30s. If the generations differ but the replicas are
 	// the same, a caller might've resized to the same replica count.
-	if int(controller.Status.Replicas) == numReplicas &&
-		int(controller.Status.FullyLabeledReplicas) == numFullyLabeledReplicas &&
-		int(controller.Status.ReadyReplicas) == numReadyReplicas &&
-		int(controller.Status.AvailableReplicas) == numAvailableReplicas &&
-		controller.Generation == controller.Status.ObservedGeneration {
+	if rc.Status.Replicas == newStatus.Replicas &&
+		rc.Status.FullyLabeledReplicas == newStatus.FullyLabeledReplicas &&
+		rc.Status.ReadyReplicas == newStatus.ReadyReplicas &&
+		rc.Status.AvailableReplicas == newStatus.AvailableReplicas &&
+		rc.Generation == rc.Status.ObservedGeneration &&
+		reflect.DeepEqual(rc.Status.Conditions, newStatus.Conditions) {
 		return nil
 	}
 	// Save the generation number we acted on, otherwise we might wrongfully indicate
 	// that we've seen a spec update when we retry.
 	// TODO: This can clobber an update if we allow multiple agents to write to the
 	// same status.
-	generation := controller.Generation
+	newStatus.ObservedGeneration = rc.Generation
 
 	var getErr error
-	for i, rc := 0, &controller; ; i++ {
-		glog.V(4).Infof(fmt.Sprintf("Updating replica count for rc: %s/%s, ", controller.Namespace, controller.Name) +
-			fmt.Sprintf("replicas %d->%d (need %d), ", controller.Status.Replicas, numReplicas, controller.Spec.Replicas) +
-			fmt.Sprintf("fullyLabeledReplicas %d->%d, ", controller.Status.FullyLabeledReplicas, numFullyLabeledReplicas) +
-			fmt.Sprintf("readyReplicas %d->%d, ", controller.Status.ReadyReplicas, numReadyReplicas) +
-			fmt.Sprintf("availableReplicas %d->%d, ", controller.Status.AvailableReplicas, numAvailableReplicas) +
-			fmt.Sprintf("sequence No: %v->%v", controller.Status.ObservedGeneration, generation))
+	for i, rc := 0, &rc; ; i++ {
+		glog.V(4).Infof(fmt.Sprintf("Updating replica count for rc: %s/%s, ", rc.Namespace, rc.Name) +
+			fmt.Sprintf("replicas %d->%d (need %d), ", rc.Status.Replicas, newStatus.Replicas, rc.Spec.Replicas) +
+			fmt.Sprintf("fullyLabeledReplicas %d->%d, ", rc.Status.FullyLabeledReplicas, newStatus.FullyLabeledReplicas) +
+			fmt.Sprintf("readyReplicas %d->%d, ", rc.Status.ReadyReplicas, newStatus.ReadyReplicas) +
+			fmt.Sprintf("availableReplicas %d->%d, ", rc.Status.AvailableReplicas, newStatus.AvailableReplicas) +
+			fmt.Sprintf("sequence No: %v->%v", rc.Status.ObservedGeneration, newStatus.ObservedGeneration))
 
-		rc.Status = api.ReplicationControllerStatus{
-			Replicas:             int32(numReplicas),
-			FullyLabeledReplicas: int32(numFullyLabeledReplicas),
-			ReadyReplicas:        int32(numReadyReplicas),
-			AvailableReplicas:    int32(numAvailableReplicas),
-			ObservedGeneration:   generation,
-		}
-		_, updateErr = rcClient.UpdateStatus(rc)
+		rc.Status = newStatus
+		_, updateErr = c.UpdateStatus(rc)
 		if updateErr == nil || i >= statusUpdateRetries {
 			return updateErr
 		}
 		// Update the controller with the latest resource version for the next poll
-		if rc, getErr = rcClient.Get(controller.Name); getErr != nil {
+		if rc, getErr = c.Get(rc.Name); getErr != nil {
 			// If the GET fails we can't trust status.Replicas anymore. This error
 			// is bound to be more interesting than the update failure.
 			return getErr
@@ -85,3 +83,96 @@ func (o OverlappingControllers) Less(i, j int) bool {
 	}
 	return o[i].CreationTimestamp.Before(o[j].CreationTimestamp)
 }
+
+func calculateStatus(rc api.ReplicationController, filteredPods []*api.Pod, manageReplicasErr error) api.ReplicationControllerStatus {
+	newStatus := rc.Status
+	// Count the number of pods that have labels matching the labels of the pod
+	// template of the replication controller, the matching pods may have more
+	// labels than are in the template. Because the label of podTemplateSpec is
+	// a superset of the selector of the replication controller, so the possible
+	// matching pods must be part of the filteredPods.
+	fullyLabeledReplicasCount := 0
+	readyReplicasCount := 0
+	availableReplicasCount := 0
+	templateLabel := labels.Set(rc.Spec.Template.Labels).AsSelectorPreValidated()
+	for _, pod := range filteredPods {
+		if templateLabel.Matches(labels.Set(pod.Labels)) {
+			fullyLabeledReplicasCount++
+		}
+		if api.IsPodReady(pod) {
+			readyReplicasCount++
+			if api.IsPodAvailable(pod, rc.Spec.MinReadySeconds, unversioned.Now()) {
+				availableReplicasCount++
+			}
+		}
+	}
+
+	failureCond := GetCondition(rc.Status, api.ReplicationControllerReplicaFailure)
+	if manageReplicasErr != nil && failureCond == nil {
+		var reason string
+		if diff := len(filteredPods) - int(rc.Spec.Replicas); diff < 0 {
+			reason = "FailedCreate"
+		} else if diff > 0 {
+			reason = "FailedDelete"
+		}
+		cond := NewReplicationControllerCondition(api.ReplicationControllerReplicaFailure, api.ConditionTrue, reason, manageReplicasErr.Error())
+		SetCondition(&newStatus, cond)
+	} else if manageReplicasErr == nil && failureCond != nil {
+		RemoveCondition(&newStatus, api.ReplicationControllerReplicaFailure)
+	}
+
+	newStatus.Replicas = int32(len(filteredPods))
+	newStatus.FullyLabeledReplicas = int32(fullyLabeledReplicasCount)
+	newStatus.ReadyReplicas = int32(readyReplicasCount)
+	newStatus.AvailableReplicas = int32(availableReplicasCount)
+	return newStatus
+}
+
+// NewReplicationControllerCondition creates a new replication controller condition.
+func NewReplicationControllerCondition(condType api.ReplicationControllerConditionType, status api.ConditionStatus, reason, msg string) api.ReplicationControllerCondition {
+	return api.ReplicationControllerCondition{
+		Type:               condType,
+		Status:             status,
+		LastTransitionTime: unversioned.Now(),
+		Reason:             reason,
+		Message:            msg,
+	}
+}
+
+// GetCondition returns a replication controller condition with the provided type if it exists.
+func GetCondition(status api.ReplicationControllerStatus, condType api.ReplicationControllerConditionType) *api.ReplicationControllerCondition {
+	for i := range status.Conditions {
+		c := status.Conditions[i]
+		if c.Type == condType {
+			return &c
+		}
+	}
+	return nil
+}
+
+// SetCondition adds/replaces the given condition in the replication controller status.
+func SetCondition(status *api.ReplicationControllerStatus, condition api.ReplicationControllerCondition) {
+	currentCond := GetCondition(*status, condition.Type)
+	if currentCond != nil && currentCond.Status == condition.Status && currentCond.Reason == condition.Reason {
+		return
+	}
+	newConditions := filterOutCondition(status.Conditions, condition.Type)
+	status.Conditions = append(newConditions, condition)
+}
+
+// RemoveCondition removes the condition with the provided type from the replication controller status.
+func RemoveCondition(status *api.ReplicationControllerStatus, condType api.ReplicationControllerConditionType) {
+	status.Conditions = filterOutCondition(status.Conditions, condType)
+}
+
+// filterOutCondition returns a new slice of replication controller conditions without conditions with the provided type.
+func filterOutCondition(conditions []api.ReplicationControllerCondition, condType api.ReplicationControllerConditionType) []api.ReplicationControllerCondition {
+	var newConditions []api.ReplicationControllerCondition
+	for _, c := range conditions {
+		if c.Type == condType {
+			continue
+		}
+		newConditions = append(newConditions, c)
+	}
+	return newConditions
+}
diff --git a/pkg/util/testing/fake_handler.go b/pkg/util/testing/fake_handler.go
index 71f8f534c93..6790cfd8ce0 100644
--- a/pkg/util/testing/fake_handler.go
+++ b/pkg/util/testing/fake_handler.go
@@ -88,6 +88,9 @@ func (f *FakeHandler) ServeHTTP(response http.ResponseWriter, request *http.Requ
 		f.T.Logf("Received read error: %v", err)
 	}
 	f.RequestBody = string(bodyReceived)
+	if f.T != nil {
+		f.T.Logf("request body: %s", f.RequestBody)
+	}
 }
 
 func (f *FakeHandler) ValidateRequestCount(t TestInterface, count int) bool {
diff --git a/test/e2e/BUILD b/test/e2e/BUILD
index bd569dc340c..d450a1ec7a6 100644
--- a/test/e2e/BUILD
+++ b/test/e2e/BUILD
@@ -140,6 +140,8 @@ go_library(
         "//pkg/controller/endpoint:go_default_library",
         "//pkg/controller/job:go_default_library",
         "//pkg/controller/petset:go_default_library",
+        "//pkg/controller/replicaset:go_default_library",
+        "//pkg/controller/replication:go_default_library",
         "//pkg/fields:go_default_library",
         "//pkg/kubectl:go_default_library",
         "//pkg/kubectl/cmd/util:go_default_library",
diff --git a/test/e2e/deployment.go b/test/e2e/deployment.go
index f1d7677e30e..1537d3d8874 100644
--- a/test/e2e/deployment.go
+++ b/test/e2e/deployment.go
@@ -99,33 +99,6 @@ var _ = framework.KubeDescribe("Deployment", func() {
 	// See https://github.com/kubernetes/kubernetes/issues/29229
 })
 
-func newRS(rsName string, replicas int32, rsPodLabels map[string]string, imageName string, image string) *extensions.ReplicaSet {
-	zero := int64(0)
-	return &extensions.ReplicaSet{
-		ObjectMeta: api.ObjectMeta{
-			Name: rsName,
-		},
-		Spec: extensions.ReplicaSetSpec{
-			Replicas: replicas,
-			Selector: &unversioned.LabelSelector{MatchLabels: rsPodLabels},
-			Template: api.PodTemplateSpec{
-				ObjectMeta: api.ObjectMeta{
-					Labels: rsPodLabels,
-				},
-				Spec: api.PodSpec{
-					TerminationGracePeriodSeconds: &zero,
-					Containers: []api.Container{
-						{
-							Name:  imageName,
-							Image: image,
-						},
-					},
-				},
-			},
-		},
-	}
-}
-
 func newDeployment(deploymentName string, replicas int32, podLabels map[string]string, imageName string, image string, strategyType extensions.DeploymentStrategyType, revisionHistoryLimit *int32) *extensions.Deployment {
 	zero := int64(0)
 	return &extensions.Deployment{
diff --git a/test/e2e/framework/util.go b/test/e2e/framework/util.go
index 2c98f78d617..42199bb7ffd 100644
--- a/test/e2e/framework/util.go
+++ b/test/e2e/framework/util.go
@@ -3232,7 +3232,8 @@ type updateDeploymentFunc func(d *extensions.Deployment)
 
 func UpdateDeploymentWithRetries(c clientset.Interface, namespace, name string, applyUpdate updateDeploymentFunc) (deployment *extensions.Deployment, err error) {
 	deployments := c.Extensions().Deployments(namespace)
-	err = wait.Poll(10*time.Millisecond, 1*time.Minute, func() (bool, error) {
+	var updateErr error
+	pollErr := wait.Poll(10*time.Millisecond, 1*time.Minute, func() (bool, error) {
 		if deployment, err = deployments.Get(name); err != nil {
 			return false, err
 		}
@@ -3242,9 +3243,63 @@ func UpdateDeploymentWithRetries(c clientset.Interface, namespace, name string,
 			Logf("Updating deployment %s", name)
 			return true, nil
 		}
+		updateErr = err
 		return false, nil
 	})
-	return deployment, err
+	if pollErr == wait.ErrWaitTimeout {
+		pollErr = fmt.Errorf("couldn't apply the provided updated to deployment %q: %v", name, updateErr)
+	}
+	return deployment, pollErr
+}
+
+type updateRsFunc func(d *extensions.ReplicaSet)
+
+func UpdateReplicaSetWithRetries(c clientset.Interface, namespace, name string, applyUpdate updateRsFunc) (*extensions.ReplicaSet, error) {
+	var rs *extensions.ReplicaSet
+	var updateErr error
+	pollErr := wait.PollImmediate(10*time.Millisecond, 1*time.Minute, func() (bool, error) {
+		var err error
+		if rs, err = c.Extensions().ReplicaSets(namespace).Get(name); err != nil {
+			return false, err
+		}
+		// Apply the update, then attempt to push it to the apiserver.
+		applyUpdate(rs)
+		if rs, err = c.Extensions().ReplicaSets(namespace).Update(rs); err == nil {
+			Logf("Updating replica set %q", name)
+			return true, nil
+		}
+		updateErr = err
+		return false, nil
+	})
+	if pollErr == wait.ErrWaitTimeout {
+		pollErr = fmt.Errorf("couldn't apply the provided updated to replicaset %q: %v", name, updateErr)
+	}
+	return rs, pollErr
+}
+
+type updateRcFunc func(d *api.ReplicationController)
+
+func UpdateReplicationControllerWithRetries(c clientset.Interface, namespace, name string, applyUpdate updateRcFunc) (*api.ReplicationController, error) {
+	var rc *api.ReplicationController
+	var updateErr error
+	pollErr := wait.PollImmediate(10*time.Millisecond, 1*time.Minute, func() (bool, error) {
+		var err error
+		if rc, err = c.Core().ReplicationControllers(namespace).Get(name); err != nil {
+			return false, err
+		}
+		// Apply the update, then attempt to push it to the apiserver.
+		applyUpdate(rc)
+		if rc, err = c.Core().ReplicationControllers(namespace).Update(rc); err == nil {
+			Logf("Updating replication controller %q", name)
+			return true, nil
+		}
+		updateErr = err
+		return false, nil
+	})
+	if pollErr == wait.ErrWaitTimeout {
+		pollErr = fmt.Errorf("couldn't apply the provided updated to rc %q: %v", name, updateErr)
+	}
+	return rc, pollErr
 }
 
 // NodeAddresses returns the first address of the given type of each node.
diff --git a/test/e2e/rc.go b/test/e2e/rc.go
index 8103a617063..126311c18ad 100644
--- a/test/e2e/rc.go
+++ b/test/e2e/rc.go
@@ -21,6 +21,8 @@ import (
 	"time"
 
 	"k8s.io/kubernetes/pkg/api"
+	"k8s.io/kubernetes/pkg/api/resource"
+	"k8s.io/kubernetes/pkg/controller/replication"
 	"k8s.io/kubernetes/pkg/labels"
 	"k8s.io/kubernetes/pkg/util/uuid"
 	"k8s.io/kubernetes/pkg/util/wait"
@@ -43,8 +45,38 @@ var _ = framework.KubeDescribe("ReplicationController", func() {
 
 		ServeImageOrFail(f, "private", "b.gcr.io/k8s_authenticated_test/serve_hostname:v1.4")
 	})
+
+	It("should surface a failure condition on a common issue like exceeded quota", func() {
+		rcConditionCheck(f)
+	})
 })
 
+func newRC(rsName string, replicas int32, rcPodLabels map[string]string, imageName string, image string) *api.ReplicationController {
+	zero := int64(0)
+	return &api.ReplicationController{
+		ObjectMeta: api.ObjectMeta{
+			Name: rsName,
+		},
+		Spec: api.ReplicationControllerSpec{
+			Replicas: replicas,
+			Template: &api.PodTemplateSpec{
+				ObjectMeta: api.ObjectMeta{
+					Labels: rcPodLabels,
+				},
+				Spec: api.PodSpec{
+					TerminationGracePeriodSeconds: &zero,
+					Containers: []api.Container{
+						{
+							Name:  imageName,
+							Image: image,
+						},
+					},
+				},
+			},
+		},
+	}
+}
+
 // A basic test to check the deployment of an image using
 // a replication controller. The image serves its hostname
 // which is checked for each replica.
@@ -117,3 +149,87 @@ func ServeImageOrFail(f *framework.Framework, test string, image string) {
 		framework.Failf("Did not get expected responses within the timeout period of %.2f seconds.", retryTimeout.Seconds())
 	}
 }
+
+// 1. Create a quota restricting pods in the current namespace to 2.
+// 2. Create a replication controller that wants to run 3 pods.
+// 3. Check replication controller conditions for a ReplicaFailure condition.
+// 4. Relax quota or scale down the controller and observe the condition is gone.
+func rcConditionCheck(f *framework.Framework) {
+	c := f.ClientSet
+	namespace := f.Namespace.Name
+	name := "condition-test"
+
+	By(fmt.Sprintf("Creating quota %q that allows only two pods to run in the current namespace", name))
+	quota := newPodQuota(name, "2")
+	_, err := c.Core().ResourceQuotas(namespace).Create(quota)
+	Expect(err).NotTo(HaveOccurred())
+
+	err = wait.PollImmediate(1*time.Second, 1*time.Minute, func() (bool, error) {
+		quota, err = c.Core().ResourceQuotas(namespace).Get(name)
+		if err != nil {
+			return false, err
+		}
+		podQuota := quota.Status.Hard[api.ResourcePods]
+		quantity := resource.MustParse("2")
+		return (&podQuota).Cmp(quantity) == 0, nil
+	})
+	if err == wait.ErrWaitTimeout {
+		err = fmt.Errorf("resource quota %q never synced", name)
+	}
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Creating rc %q that asks for more than the allowed pod quota", name))
+	rc := newRC(name, 3, map[string]string{"name": name}, nginxImageName, nginxImage)
+	rc, err = c.Core().ReplicationControllers(namespace).Create(rc)
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Checking rc %q has the desired failure condition set", name))
+	generation := rc.Generation
+	conditions := rc.Status.Conditions
+	err = wait.PollImmediate(1*time.Second, 1*time.Minute, func() (bool, error) {
+		rc, err = c.Core().ReplicationControllers(namespace).Get(name)
+		if err != nil {
+			return false, err
+		}
+
+		if generation > rc.Status.ObservedGeneration {
+			return false, nil
+		}
+		conditions = rc.Status.Conditions
+
+		cond := replication.GetCondition(rc.Status, api.ReplicationControllerReplicaFailure)
+		return cond != nil, nil
+	})
+	if err == wait.ErrWaitTimeout {
+		err = fmt.Errorf("rc manager never added the failure condition for rc %q: %#v", name, conditions)
+	}
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Scaling down rc %q to satisfy pod quota", name))
+	rc, err = framework.UpdateReplicationControllerWithRetries(c, namespace, name, func(update *api.ReplicationController) {
+		update.Spec.Replicas = 2
+	})
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Checking rc %q has no failure condition set", name))
+	generation = rc.Generation
+	conditions = rc.Status.Conditions
+	err = wait.PollImmediate(1*time.Second, 1*time.Minute, func() (bool, error) {
+		rc, err = c.Core().ReplicationControllers(namespace).Get(name)
+		if err != nil {
+			return false, err
+		}
+
+		if generation > rc.Status.ObservedGeneration {
+			return false, nil
+		}
+		conditions = rc.Status.Conditions
+
+		cond := replication.GetCondition(rc.Status, api.ReplicationControllerReplicaFailure)
+		return cond == nil, nil
+	})
+	if err == wait.ErrWaitTimeout {
+		err = fmt.Errorf("rc manager never removed the failure condition for rc %q: %#v", name, conditions)
+	}
+	Expect(err).NotTo(HaveOccurred())
+}
diff --git a/test/e2e/replica_set.go b/test/e2e/replica_set.go
index bd8da58d3a8..8e9b62e84af 100644
--- a/test/e2e/replica_set.go
+++ b/test/e2e/replica_set.go
@@ -21,8 +21,10 @@ import (
 	"time"
 
 	"k8s.io/kubernetes/pkg/api"
+	"k8s.io/kubernetes/pkg/api/resource"
 	"k8s.io/kubernetes/pkg/api/unversioned"
 	"k8s.io/kubernetes/pkg/apis/extensions"
+	"k8s.io/kubernetes/pkg/controller/replicaset"
 	"k8s.io/kubernetes/pkg/labels"
 	"k8s.io/kubernetes/pkg/util/uuid"
 	"k8s.io/kubernetes/pkg/util/wait"
@@ -32,6 +34,45 @@ import (
 	. "github.com/onsi/gomega"
 )
 
+func newRS(rsName string, replicas int32, rsPodLabels map[string]string, imageName string, image string) *extensions.ReplicaSet {
+	zero := int64(0)
+	return &extensions.ReplicaSet{
+		ObjectMeta: api.ObjectMeta{
+			Name: rsName,
+		},
+		Spec: extensions.ReplicaSetSpec{
+			Replicas: replicas,
+			Template: api.PodTemplateSpec{
+				ObjectMeta: api.ObjectMeta{
+					Labels: rsPodLabels,
+				},
+				Spec: api.PodSpec{
+					TerminationGracePeriodSeconds: &zero,
+					Containers: []api.Container{
+						{
+							Name:  imageName,
+							Image: image,
+						},
+					},
+				},
+			},
+		},
+	}
+}
+
+func newPodQuota(name, number string) *api.ResourceQuota {
+	return &api.ResourceQuota{
+		ObjectMeta: api.ObjectMeta{
+			Name: name,
+		},
+		Spec: api.ResourceQuotaSpec{
+			Hard: api.ResourceList{
+				api.ResourcePods: resource.MustParse(number),
+			},
+		},
+	}
+}
+
 var _ = framework.KubeDescribe("ReplicaSet", func() {
 	f := framework.NewDefaultFramework("replicaset")
 
@@ -45,6 +86,10 @@ var _ = framework.KubeDescribe("ReplicaSet", func() {
 
 		ReplicaSetServeImageOrFail(f, "private", "b.gcr.io/k8s_authenticated_test/serve_hostname:v1.4")
 	})
+
+	It("should surface a failure condition on a common issue like exceeded quota", func() {
+		rsConditionCheck(f)
+	})
 })
 
 // A basic test to check the deployment of an image using a ReplicaSet. The
@@ -118,3 +163,88 @@ func ReplicaSetServeImageOrFail(f *framework.Framework, test string, image strin
 		framework.Failf("Did not get expected responses within the timeout period of %.2f seconds.", retryTimeout.Seconds())
 	}
 }
+
+// 1. Create a quota restricting pods in the current namespace to 2.
+// 2. Create a replica set that wants to run 3 pods.
+// 3. Check replica set conditions for a ReplicaFailure condition.
+// 4. Scale down the replica set and observe the condition is gone.
+func rsConditionCheck(f *framework.Framework) {
+	c := f.ClientSet
+	namespace := f.Namespace.Name
+	name := "condition-test"
+
+	By(fmt.Sprintf("Creating quota %q that allows only two pods to run in the current namespace", name))
+	quota := newPodQuota(name, "2")
+	_, err := c.Core().ResourceQuotas(namespace).Create(quota)
+	Expect(err).NotTo(HaveOccurred())
+
+	err = wait.PollImmediate(1*time.Second, 1*time.Minute, func() (bool, error) {
+		quota, err = c.Core().ResourceQuotas(namespace).Get(name)
+		if err != nil {
+			return false, err
+		}
+		quantity := resource.MustParse("2")
+		podQuota := quota.Status.Hard[api.ResourcePods]
+		return (&podQuota).Cmp(quantity) == 0, nil
+	})
+	if err == wait.ErrWaitTimeout {
+		err = fmt.Errorf("resource quota %q never synced", name)
+	}
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Creating replica set %q that asks for more than the allowed pod quota", name))
+	rs := newRS(name, 3, map[string]string{"name": name}, nginxImageName, nginxImage)
+	rs, err = c.Extensions().ReplicaSets(namespace).Create(rs)
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Checking replica set %q has the desired failure condition set", name))
+	generation := rs.Generation
+	conditions := rs.Status.Conditions
+	err = wait.PollImmediate(1*time.Second, 1*time.Minute, func() (bool, error) {
+		rs, err = c.Extensions().ReplicaSets(namespace).Get(name)
+		if err != nil {
+			return false, err
+		}
+
+		if generation > rs.Status.ObservedGeneration {
+			return false, nil
+		}
+		conditions = rs.Status.Conditions
+
+		cond := replicaset.GetCondition(rs.Status, extensions.ReplicaSetReplicaFailure)
+		return cond != nil, nil
+
+	})
+	if err == wait.ErrWaitTimeout {
+		err = fmt.Errorf("rs controller never added the failure condition for replica set %q: %#v", name, conditions)
+	}
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Scaling down replica set %q to satisfy pod quota", name))
+	rs, err = framework.UpdateReplicaSetWithRetries(c, namespace, name, func(update *extensions.ReplicaSet) {
+		update.Spec.Replicas = 2
+	})
+	Expect(err).NotTo(HaveOccurred())
+
+	By(fmt.Sprintf("Checking replica set %q has no failure condition set", name))
+	generation = rs.Generation
+	conditions = rs.Status.Conditions
+	err = wait.PollImmediate(1*time.Second, 1*time.Minute, func() (bool, error) {
+		rs, err = c.Extensions().ReplicaSets(namespace).Get(name)
+		if err != nil {
+			return false, err
+		}
+
+		if generation > rs.Status.ObservedGeneration {
+			return false, nil
+		}
+		conditions = rs.Status.Conditions
+
+		cond := replicaset.GetCondition(rs.Status, extensions.ReplicaSetReplicaFailure)
+		return cond == nil, nil
+	})
+	if err == wait.ErrWaitTimeout {
+		err = fmt.Errorf("rs controller never removed the failure condition for rs %q: %#v", name, conditions)
+	}
+	Expect(err).NotTo(HaveOccurred())
+}
diff --git a/test/test_owners.csv b/test/test_owners.csv
index 1abf7a569b2..b6be9f1ce2b 100644
--- a/test/test_owners.csv
+++ b/test/test_owners.csv
@@ -341,8 +341,10 @@ Reboot each node by triggering kernel panic and ensure they function upon restar
 Redis should create and stop redis servers,timstclair,1
 ReplicaSet should serve a basic image on each replica with a private image,pmorie,1
 ReplicaSet should serve a basic image on each replica with a public image,krousey,0
+ReplicaSet should surface a failure condition on a common issue like exceeded quota,kargakis,0
 ReplicationController should serve a basic image on each replica with a private image,jbeda,1
 ReplicationController should serve a basic image on each replica with a public image,krousey,1
+ReplicationController should surface a failure condition on a common issue like exceeded quota,kargakis,0
 Rescheduler should ensure that critical pod is scheduled in case there is no resources available,mtaufen,1
 Resource-usage regular resource usage tracking resource tracking for * pods per node,janetkuo,1
 ResourceQuota should create a ResourceQuota and capture the life of a configMap.,timstclair,1