diff --git a/build/sdk.atree b/build/sdk.atree
index 20542a2..1749915 100644
--- a/build/sdk.atree
+++ b/build/sdk.atree
@@ -58,6 +58,9 @@
 development/tools/scripts/android_rules.xml platforms/${PLATFORM_NAME}/templates/android_rules.xml
 development/tools/scripts/android_test_rules.xml platforms/${PLATFORM_NAME}/templates/android_test_rules.xml
 development/tools/scripts/build.template tools/lib/build.template
+development/tools/scripts/icon_ldpi.png platforms/${PLATFORM_NAME}/templates/icon_ldpi.png
+development/tools/scripts/icon_mdpi.png platforms/${PLATFORM_NAME}/templates/icon_mdpi.png
+development/tools/scripts/icon_hdpi.png platforms/${PLATFORM_NAME}/templates/icon_hdpi.png
 
 # emacs support
 development/tools/scripts/android.el tools/lib/android.el
diff --git a/tools/eclipse/plugins/com.android.ide.eclipse.adt/src/com/android/ide/eclipse/adt/internal/wizards/newproject/NewProjectWizard.java b/tools/eclipse/plugins/com.android.ide.eclipse.adt/src/com/android/ide/eclipse/adt/internal/wizards/newproject/NewProjectWizard.java
index d8989c2..df333a5 100644
--- a/tools/eclipse/plugins/com.android.ide.eclipse.adt/src/com/android/ide/eclipse/adt/internal/wizards/newproject/NewProjectWizard.java
+++ b/tools/eclipse/plugins/com.android.ide.eclipse.adt/src/com/android/ide/eclipse/adt/internal/wizards/newproject/NewProjectWizard.java
@@ -20,6 +20,7 @@
 import com.android.ide.eclipse.adt.AndroidConstants;
 import com.android.ide.eclipse.adt.internal.project.AndroidNature;
 import com.android.ide.eclipse.adt.internal.project.ProjectHelper;
+import com.android.ide.eclipse.adt.internal.resources.configurations.PixelDensityQualifier.Density;
 import com.android.ide.eclipse.adt.internal.sdk.Sdk;
 import com.android.ide.eclipse.adt.internal.wizards.newproject.NewProjectCreationPage.IMainInfo;
 import com.android.ide.eclipse.adt.internal.wizards.newproject.NewTestProjectCreationPage.TestInfo;
@@ -132,6 +133,12 @@
         SdkConstants.FD_ASSETS + AndroidConstants.WS_SEP;
     private static final String DRAWABLE_DIRECTORY =
         SdkConstants.FD_DRAWABLE + AndroidConstants.WS_SEP;
+    private static final String DRAWABLE_HDPI_DIRECTORY =
+        SdkConstants.FD_DRAWABLE + "-" + Density.HIGH.getValue() + AndroidConstants.WS_SEP;   //$NON-NLS-1$
+    private static final String DRAWABLE_MDPI_DIRECTORY =
+        SdkConstants.FD_DRAWABLE + "-" + Density.MEDIUM.getValue() + AndroidConstants.WS_SEP; //$NON-NLS-1$
+    private static final String DRAWABLE_LDPI_DIRECTORY =
+        SdkConstants.FD_DRAWABLE + "-" + Density.LOW.getValue() + AndroidConstants.WS_SEP;    //$NON-NLS-1$
     private static final String LAYOUT_DIRECTORY =
         SdkConstants.FD_LAYOUT + AndroidConstants.WS_SEP;
     private static final String VALUES_DIRECTORY =
@@ -159,7 +166,10 @@
             + "strings.template"; //$NON-NLS-1$
     private static final String TEMPLATE_STRING = TEMPLATES_DIRECTORY
             + "string.template"; //$NON-NLS-1$
-    private static final String ICON = "icon.png"; //$NON-NLS-1$
+    private static final String PROJECT_ICON = "icon.png"; //$NON-NLS-1$
+    private static final String ICON_HDPI = "icon_hdpi.png"; //$NON-NLS-1$
+    private static final String ICON_MDPI = "icon_mdpi.png"; //$NON-NLS-1$
+    private static final String ICON_LDPI = "icon_ldpi.png"; //$NON-NLS-1$
 
     private static final String STRINGS_FILE = "strings.xml";       //$NON-NLS-1$
 
@@ -170,7 +180,10 @@
     private static final String[] DEFAULT_DIRECTORIES = new String[] {
             BIN_DIRECTORY, RES_DIRECTORY, ASSETS_DIRECTORY };
     private static final String[] RES_DIRECTORIES = new String[] {
-            DRAWABLE_DIRECTORY, LAYOUT_DIRECTORY, VALUES_DIRECTORY};
+            DRAWABLE_DIRECTORY, LAYOUT_DIRECTORY, VALUES_DIRECTORY };
+    private static final String[] RES_DENSITY_ENABLED_DIRECTORIES = new String[] {
+            DRAWABLE_HDPI_DIRECTORY, DRAWABLE_MDPI_DIRECTORY, DRAWABLE_LDPI_DIRECTORY,
+            LAYOUT_DIRECTORY, VALUES_DIRECTORY };
 
     private static final String PROJECT_LOGO_LARGE = "icons/android_large.png"; //$NON-NLS-1$
     private static final String JAVA_ACTIVITY_TEMPLATE = "java_file.template";  //$NON-NLS-1$
@@ -587,6 +600,10 @@
             Map<String, String> dictionary)
                 throws CoreException, IOException {
 
+        // get the project target
+        IAndroidTarget target = (IAndroidTarget) parameters.get(PARAM_SDK_TARGET);
+        boolean legacy = target.getVersion().getApiLevel() < 4;
+
         // Create project and open it
         project.create(description, new SubProgressMonitor(monitor, 10));
         if (monitor.isCanceled()) throw new OperationCanceledException();
@@ -605,7 +622,11 @@
         addDefaultDirectories(project, AndroidConstants.WS_ROOT, sourceFolders, monitor);
 
         // Create the resource folders in the project if they don't already exist.
-        addDefaultDirectories(project, RES_DIRECTORY, RES_DIRECTORIES, monitor);
+        if (legacy) {
+            addDefaultDirectories(project, RES_DIRECTORY, RES_DIRECTORIES, monitor);
+        } else {
+            addDefaultDirectories(project, RES_DIRECTORY, RES_DENSITY_ENABLED_DIRECTORIES, monitor);
+        }
 
         // Setup class path: mark folders as source folders
         IJavaProject javaProject = JavaCore.create(project);
@@ -624,7 +645,7 @@
             addManifest(project, parameters, dictionary, monitor);
 
             // add the default app icon
-            addIcon(project, monitor);
+            addIcon(project, legacy, monitor);
 
             // Create the default package components
             addSampleCode(project, sourceFolders[0], parameters, dictionary, monitor);
@@ -650,7 +671,8 @@
                 // the currently-empty current list.
                 desc.setReferencedProjects(new IProject[] { refProject });
 
-                project.setDescription(desc, IResource.KEEP_HISTORY, new SubProgressMonitor(monitor, 10));
+                project.setDescription(desc, IResource.KEEP_HISTORY,
+                        new SubProgressMonitor(monitor, 10));
 
                 IClasspathEntry entry = JavaCore.newProjectEntry(
                         refProject.getFullPath(), //path
@@ -664,8 +686,7 @@
             }
         }
 
-        Sdk.getCurrent().setProject(project, (IAndroidTarget) parameters.get(PARAM_SDK_TARGET),
-                null /* apkConfigMap*/);
+        Sdk.getCurrent().setProject(project, target, null /* apkConfigMap*/);
 
         // Fix the project to make sure all properties are as expected.
         // Necessary for existing projects and good for new ones to.
@@ -839,23 +860,58 @@
      * Adds default application icon to the project.
      *
      * @param project The Java Project to update.
+     * @param legacy whether we're running in legacy mode (no density support)
      * @param monitor An existing monitor.
      * @throws CoreException if the method fails to update the project.
      */
-    private void addIcon(IProject project, IProgressMonitor monitor)
+    private void addIcon(IProject project, boolean legacy, IProgressMonitor monitor)
             throws CoreException {
-        IFile file = project.getFile(RES_DIRECTORY + AndroidConstants.WS_SEP
-                                     + DRAWABLE_DIRECTORY + AndroidConstants.WS_SEP + ICON);
-        if (!file.exists()) {
-            // read the content from the template
-            byte[] buffer = AdtPlugin.readEmbeddedFile(TEMPLATES_DIRECTORY + ICON);
-
-            // if valid
-            if (buffer != null) {
-                // Save in the project
-                InputStream stream = new ByteArrayInputStream(buffer);
-                file.create(stream, false /* force */, new SubProgressMonitor(monitor, 10));
+        if (legacy) { // density support
+            // do medium density icon only, in the default drawable folder.
+            IFile file = project.getFile(RES_DIRECTORY + AndroidConstants.WS_SEP
+                    + DRAWABLE_DIRECTORY + AndroidConstants.WS_SEP + PROJECT_ICON);
+            if (!file.exists()) {
+                addFile(file, AdtPlugin.readEmbeddedFile(TEMPLATES_DIRECTORY + ICON_MDPI), monitor);
             }
+        } else {
+            // do all 3 icons.
+            IFile file;
+
+            // high density
+            file = project.getFile(RES_DIRECTORY + AndroidConstants.WS_SEP
+                    + DRAWABLE_HDPI_DIRECTORY + AndroidConstants.WS_SEP + PROJECT_ICON);
+            if (!file.exists()) {
+                addFile(file, AdtPlugin.readEmbeddedFile(TEMPLATES_DIRECTORY + ICON_HDPI), monitor);
+            }
+
+            // medium density
+            file = project.getFile(RES_DIRECTORY + AndroidConstants.WS_SEP
+                    + DRAWABLE_MDPI_DIRECTORY + AndroidConstants.WS_SEP + PROJECT_ICON);
+            if (!file.exists()) {
+                addFile(file, AdtPlugin.readEmbeddedFile(TEMPLATES_DIRECTORY + ICON_MDPI), monitor);
+            }
+
+            // low density
+            file = project.getFile(RES_DIRECTORY + AndroidConstants.WS_SEP
+                    + DRAWABLE_LDPI_DIRECTORY + AndroidConstants.WS_SEP + PROJECT_ICON);
+            if (!file.exists()) {
+                addFile(file, AdtPlugin.readEmbeddedFile(TEMPLATES_DIRECTORY + ICON_LDPI), monitor);
+            }
+        }
+    }
+
+    /**
+     * Creates a file from a data source.
+     * @param dest the file to write
+     * @param source the content of the file.
+     * @param monitor the progress monitor
+     * @throws CoreException
+     */
+    private void addFile(IFile dest, byte[] source, IProgressMonitor monitor) throws CoreException {
+        if (source != null) {
+            // Save in the project
+            InputStream stream = new ByteArrayInputStream(source);
+            dest.create(stream, false /* force */, new SubProgressMonitor(monitor, 10));
         }
     }
 
diff --git a/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon.png b/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon.png
deleted file mode 100644
index 7502484..0000000
--- a/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon.png
+++ /dev/null
Binary files differ
diff --git a/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_hdpi.png b/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_hdpi.png
new file mode 100644
index 0000000..8074c4c
--- /dev/null
+++ b/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_hdpi.png
Binary files differ
diff --git a/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_ldpi.png b/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_ldpi.png
new file mode 100644
index 0000000..1095584
--- /dev/null
+++ b/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_ldpi.png
Binary files differ
diff --git a/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_mdpi.png b/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_mdpi.png
new file mode 100644
index 0000000..a07c69f
--- /dev/null
+++ b/tools/eclipse/plugins/com.android.ide.eclipse.adt/templates/icon_mdpi.png
Binary files differ
diff --git a/tools/scripts/AndroidManifest.template b/tools/scripts/AndroidManifest.template
index 9b07072..f14f147 100644
--- a/tools/scripts/AndroidManifest.template
+++ b/tools/scripts/AndroidManifest.template
@@ -3,7 +3,7 @@
       package="PACKAGE"
       android:versionCode="1"
       android:versionName="1.0">
-    <application android:label="@string/app_name">
+    <application android:label="@string/app_name" ICON>
         <activity android:name="ACTIVITY_ENTRY_NAME"
                   android:label="@string/app_name">
             <intent-filter>
diff --git a/tools/scripts/icon_hdpi.png b/tools/scripts/icon_hdpi.png
new file mode 100644
index 0000000..8074c4c
--- /dev/null
+++ b/tools/scripts/icon_hdpi.png
Binary files differ
diff --git a/tools/scripts/icon_ldpi.png b/tools/scripts/icon_ldpi.png
new file mode 100644
index 0000000..1095584
--- /dev/null
+++ b/tools/scripts/icon_ldpi.png
Binary files differ
diff --git a/tools/scripts/icon_mdpi.png b/tools/scripts/icon_mdpi.png
new file mode 100644
index 0000000..a07c69f
--- /dev/null
+++ b/tools/scripts/icon_mdpi.png
Binary files differ
diff --git a/tools/sdkmanager/libs/sdklib/src/com/android/sdklib/internal/project/ProjectCreator.java b/tools/sdkmanager/libs/sdklib/src/com/android/sdklib/internal/project/ProjectCreator.java
index 6394795..e9e5999 100644
--- a/tools/sdkmanager/libs/sdklib/src/com/android/sdklib/internal/project/ProjectCreator.java
+++ b/tools/sdkmanager/libs/sdklib/src/com/android/sdklib/internal/project/ProjectCreator.java
@@ -29,6 +29,9 @@
 import java.io.BufferedReader;
 import java.io.BufferedWriter;
 import java.io.File;
+import java.io.FileInputStream;
+import java.io.FileNotFoundException;
+import java.io.FileOutputStream;
 import java.io.FileReader;
 import java.io.FileWriter;
 import java.io.IOException;
@@ -66,6 +69,8 @@
     private final static String PH_ACTIVITY_TESTED_CLASS_NAME = "ACTIVITY_TESTED_CLASS_NAME";
     /** Project name substitution string used in template files, i.e. "PROJECT_NAME". */
     private final static String PH_PROJECT_NAME = "PROJECT_NAME";
+    /** Application icon substitution string used in the manifest template */
+    private final static String PH_ICON = "ICON";
 
     /** Pattern for characters accepted in a project name. Since this will be used as a
      * directory name, we're being a bit conservative on purpose: dot and space cannot be used. */
@@ -106,6 +111,7 @@
         /** default UID. This will not be serialized anyway. */
         private static final long serialVersionUID = 1L;
 
+        @SuppressWarnings("unused")
         ProjectCreateException(String message) {
             super(message);
         }
@@ -329,19 +335,26 @@
             }
 
             // create other useful folders
-            File resourceFodler = createDirs(projectFolder, SdkConstants.FD_RESOURCES);
+            File resourceFolder = createDirs(projectFolder, SdkConstants.FD_RESOURCES);
             createDirs(projectFolder, SdkConstants.FD_OUTPUT);
             createDirs(projectFolder, SdkConstants.FD_NATIVE_LIBS);
 
             if (isTestProject == false) {
                 /* Make res files only for non test projects */
-                File valueFolder = createDirs(resourceFodler, SdkConstants.FD_VALUES);
+                File valueFolder = createDirs(resourceFolder, SdkConstants.FD_VALUES);
                 installTemplate("strings.template", new File(valueFolder, "strings.xml"),
                         keywords, target);
 
-                File layoutFolder = createDirs(resourceFodler, SdkConstants.FD_LAYOUT);
+                File layoutFolder = createDirs(resourceFolder, SdkConstants.FD_LAYOUT);
                 installTemplate("layout.template", new File(layoutFolder, "main.xml"),
                         keywords, target);
+
+                // create the icons
+                if (installIcons(resourceFolder, target)) {
+                    keywords.put(PH_ICON, "android:icon=\"@drawable/icon\"");
+                } else {
+                    keywords.put(PH_ICON, "");
+                }
             }
 
             /* Make AndroidManifest.xml and build.xml files */
@@ -776,8 +789,10 @@
             String line;
 
             while ((line = in.readLine()) != null) {
-                for (String key : placeholderMap.keySet()) {
-                    line = line.replace(key, placeholderMap.get(key));
+                if (placeholderMap != null) {
+                    for (String key : placeholderMap.keySet()) {
+                        line = line.replace(key, placeholderMap.get(key));
+                    }
                 }
 
                 out.write(line);
@@ -797,6 +812,85 @@
     }
 
     /**
+     * Installs the project icons.
+     * @param resourceFolder the resource folder
+     * @param target the target of the project.
+     * @return true if any icon was installed.
+     */
+    private boolean installIcons(File resourceFolder, IAndroidTarget target)
+            throws ProjectCreateException {
+        // query the target for its template directory
+        String templateFolder = target.getPath(IAndroidTarget.TEMPLATES);
+
+        boolean installedIcon = false;
+
+        installedIcon |= installIcon(templateFolder, "icon_hdpi.png", resourceFolder, "drawable-hdpi");
+        installedIcon |= installIcon(templateFolder, "icon_mdpi.png", resourceFolder, "drawable-mdpi");
+        installedIcon |= installIcon(templateFolder, "icon_ldpi.png", resourceFolder, "drawable-ldpi");
+
+        return installedIcon;
+    }
+
+    /**
+     * Installs an Icon in the project.
+     * @return true if the icon was installed.
+     */
+    private boolean installIcon(String templateFolder, String iconName, File resourceFolder,
+            String folderName) throws ProjectCreateException {
+        File icon = new File(templateFolder, iconName);
+        if (icon.exists()) {
+            File drawable = createDirs(resourceFolder, folderName);
+            installBinaryFile(icon, new File(drawable, "icon.png"));
+            return true;
+        }
+
+        return false;
+    }
+
+    /**
+     * Installs a binary file
+     * @param source the source file to copy
+     * @param destination the destination file to write
+     */
+    private void installBinaryFile(File source, File destination) {
+        byte[] buffer = new byte[8192];
+
+        FileInputStream fis = null;
+        FileOutputStream fos = null;
+        try {
+            fis = new FileInputStream(source);
+            fos = new FileOutputStream(destination);
+
+            int read;
+            while ((read = fis.read(buffer)) != -1) {
+                fos.write(buffer, 0, read);
+            }
+
+        } catch (FileNotFoundException e) {
+            // shouldn't happen since we check before.
+        } catch (IOException e) {
+            new ProjectCreateException(e, "Failed to read binary file: %1$s",
+                    source.getAbsolutePath());
+        } finally {
+            if (fis != null) {
+                try {
+                    fis.close();
+                } catch (IOException e) {
+                    // ignore
+                }
+            }
+            if (fos != null) {
+                try {
+                    fos.close();
+                } catch (IOException e) {
+                    // ignore
+                }
+            }
+        }
+        
+    }
+
+    /**
      * Prints a message unless silence is enabled.
      * <p/>
      * This is just a convenience wrapper around {@link ISdkLog#printf(String, Object...)} from