diff --git a/e2e/components/tabs/tabs.e2e.ts b/e2e/components/tabs/tabs.e2e.ts
index daf4171824a7..61f8a9b9f95e 100644
--- a/e2e/components/tabs/tabs.e2e.ts
+++ b/e2e/components/tabs/tabs.e2e.ts
@@ -11,17 +11,17 @@ describe('tabs', () => {
       browser.get('/tabs');
       tabGroup = element(by.css('md-tab-group'));
       tabLabels = element.all(by.css('.md-tab-label'));
-      tabBodies = element.all(by.css('.md-tab-body'));
+      tabBodies = element.all(by.css('md-tab-body'));
     });
 
     it('should change tabs when the label is clicked', () => {
       tabLabels.get(1).click();
-      expect(getActiveStates(tabLabels)).toEqual([false, true, false]);
-      expect(getActiveStates(tabBodies)).toEqual([false, true, false]);
+      expect(getLabelActiveStates(tabLabels)).toEqual([false, true, false]);
+      expect(getBodyActiveStates(tabBodies)).toEqual([false, true, false]);
 
       tabLabels.get(0).click();
-      expect(getActiveStates(tabLabels)).toEqual([true, false, false]);
-      expect(getActiveStates(tabBodies)).toEqual([true, false, false]);
+      expect(getLabelActiveStates(tabLabels)).toEqual([true, false, false]);
+      expect(getBodyActiveStates(tabBodies)).toEqual([true, false, false]);
     });
 
     it('should change focus with keyboard interaction', () => {
@@ -49,18 +49,13 @@ describe('tabs', () => {
   });
 });
 
-/**
- * A helper function to perform the sendKey action
- * @param key
- */
+/** A helper function to perform the sendKey action. */
 function pressKey(key: string) {
   browser.actions().sendKeys(key).perform();
 }
 
 /**
- * Returns an array of true/false that represents the focus states of the provided elements
- * @param elements
- * @returns {webdriver.promise.Promise<Promise<boolean>[]>|webdriver.promise.Promise<T[]>}
+ * Returns an array of true/false that represents the focus states of the provided elements.
  */
 function getFocusStates(elements: ElementArrayFinder) {
   return elements.map(element => {
@@ -72,21 +67,19 @@ function getFocusStates(elements: ElementArrayFinder) {
   });
 }
 
-/**
- * Returns an array of true/false that represents the active states for the provided elements
- * @param elements
- * @returns {webdriver.promise.Promise<Promise<boolean>[]>|webdriver.promise.Promise<T[]>}
- */
-function getActiveStates(elements: ElementArrayFinder) {
-  return getClassStates(elements, 'md-tab-active');
+/** Returns an array of true/false that represents the active states for the provided elements. */
+function getLabelActiveStates(elements: ElementArrayFinder) {
+  return getClassStates(elements, 'md-tab-label-active');
+}
+
+/** Returns an array of true/false that represents the active states for the provided elements */
+function getBodyActiveStates(elements: ElementArrayFinder) {
+  return getClassStates(elements, 'md-tab-body-active');
 }
 
 /**
  * Returns an array of true/false values that represents whether the provided className is on
- * each element
- * @param elements
- * @param className
- * @returns {webdriver.promise.Promise<Promise<boolean>[]>|webdriver.promise.Promise<T[]>}
+ * each element.
  */
 function getClassStates(elements: ElementArrayFinder, className: string) {
   return elements.map(element => {
diff --git a/src/demo-app/tabs/tabs-demo.html b/src/demo-app/tabs/tabs-demo.html
index 99d73d9ec327..3d8943a29714 100644
--- a/src/demo-app/tabs/tabs-demo.html
+++ b/src/demo-app/tabs/tabs-demo.html
@@ -14,14 +14,84 @@ <h1>Tab Nav Bar</h1>
 </div>
 
 
-<h1>Tab Group Demo</h1>
+<h1>Tab Group Demo - Dynamic Height</h1>
 
-<md-tab-group class="demo-tab-group">
-  <md-tab *ngFor="let tab of tabs; let i = index" [disabled]="i == 1">
+<md-tab-group class="demo-tab-group" md-dynamic-height>
+  <md-tab *ngFor="let tab of tabs" [disabled]="tab.disabled">
+    <template md-tab-label>{{tab.label}}</template>
+    {{tab.content}}
+    <br>
+    <br>
+    <div *ngIf="tab.extraContent">
+      Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nulla venenatis ante augue.
+      Phasellus volutpat neque ac dui mattis vulputate. Etiam consequat aliquam cursus.
+      In sodales pretium ultrices. Maecenas lectus est, sollicitudin consectetur felis nec,
+      feugiat ultricies mi. Aliquam erat volutpat. Nam placerat, tortor in ultrices porttitor,
+      orci enim rutrum enim, vel tempor sapien arcu a tellus. Vivamus convallis sodales ante varius
+      gravida. Curabitur a purus vel augue ultrices ultricies id a nisl. Nullam malesuada consequat
+      diam, a facilisis tortor volutpat et. Sed urna dolor, aliquet vitae posuere vulputate, euismod
+      ac lorem. Sed felis risus, pulvinar at interdum quis, vehicula sed odio. Phasellus in enim
+      venenatis, iaculis tortor eu, bibendum ante. Donec ac tellus dictum neque volutpat blandit.
+      Praesent efficitur faucibus risus, ac auctor purus porttitor vitae. Phasellus ornare dui nec
+      orci posuere, nec luctus mauris semper.
+      <br>
+      <br>
+      Morbi viverra, ante vel aliquet tincidunt, leo dolor pharetra quam, at semper massa orci nec
+      magna. Donec posuere nec sapien sed laoreet. Etiam cursus nunc in condimentum facilisis.
+      Etiam in tempor tortor. Vivamus faucibus egestas enim, at convallis diam pulvinar vel.
+      Cras ac orci eget nisi maximus cursus. Nunc urna libero, viverra sit amet nisl at, hendrerit
+      tempor turpis. Maecenas facilisis convallis mi vel tempor. Nullam vitae nunc leo. Cras sed
+      nisl consectetur, rhoncus sapien sit amet, tempus sapien.
+      <br>
+      <br>
+      Integer turpis erat, porttitor vitae mi faucibus, laoreet interdum tellus. Curabitur posuere
+      molestie dictum. Morbi eget congue risus, quis rhoncus quam. Suspendisse vitae hendrerit erat,
+      at posuere mi. Cras eu fermentum nunc. Sed id ante eu orci commodo volutpat non ac est.
+      Praesent ligula diam, congue eu enim scelerisque, finibus commodo lectus.
+    </div>
+    <br>
+    <br>
+    <md-input placeholder="Tab Label" [(ngModel)]="tab.label"></md-input>
+  </md-tab>
+</md-tab-group>
+
+
+<h1>Tab Group Demo - Fixed Height</h1>
+
+<md-tab-group class="demo-tab-group" style="height: 200px">
+  <md-tab *ngFor="let tab of tabs" [disabled]="tab.disabled">
     <template md-tab-label>{{tab.label}}</template>
     {{tab.content}}
     <br>
     <br>
+    <div *ngIf="tab.extraContent">
+      Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nulla venenatis ante augue.
+      Phasellus volutpat neque ac dui mattis vulputate. Etiam consequat aliquam cursus.
+      In sodales pretium ultrices. Maecenas lectus est, sollicitudin consectetur felis nec,
+      feugiat ultricies mi. Aliquam erat volutpat. Nam placerat, tortor in ultrices porttitor,
+      orci enim rutrum enim, vel tempor sapien arcu a tellus. Vivamus convallis sodales ante varius
+      gravida. Curabitur a purus vel augue ultrices ultricies id a nisl. Nullam malesuada consequat
+      diam, a facilisis tortor volutpat et. Sed urna dolor, aliquet vitae posuere vulputate, euismod
+      ac lorem. Sed felis risus, pulvinar at interdum quis, vehicula sed odio. Phasellus in enim
+      venenatis, iaculis tortor eu, bibendum ante. Donec ac tellus dictum neque volutpat blandit.
+      Praesent efficitur faucibus risus, ac auctor purus porttitor vitae. Phasellus ornare dui nec
+      orci posuere, nec luctus mauris semper.
+      <br>
+      <br>
+      Morbi viverra, ante vel aliquet tincidunt, leo dolor pharetra quam, at semper massa orci nec
+      magna. Donec posuere nec sapien sed laoreet. Etiam cursus nunc in condimentum facilisis.
+      Etiam in tempor tortor. Vivamus faucibus egestas enim, at convallis diam pulvinar vel.
+      Cras ac orci eget nisi maximus cursus. Nunc urna libero, viverra sit amet nisl at, hendrerit
+      tempor turpis. Maecenas facilisis convallis mi vel tempor. Nullam vitae nunc leo. Cras sed
+      nisl consectetur, rhoncus sapien sit amet, tempus sapien.
+      <br>
+      <br>
+      Integer turpis erat, porttitor vitae mi faucibus, laoreet interdum tellus. Curabitur posuere
+      molestie dictum. Morbi eget congue risus, quis rhoncus quam. Suspendisse vitae hendrerit erat,
+      at posuere mi. Cras eu fermentum nunc. Sed id ante eu orci commodo volutpat non ac est.
+      Praesent ligula diam, congue eu enim scelerisque, finibus commodo lectus.
+    </div>
+    <br>
     <br>
     <md-input placeholder="Tab Label" [(ngModel)]="tab.label"></md-input>
   </md-tab>
diff --git a/src/demo-app/tabs/tabs-demo.scss b/src/demo-app/tabs/tabs-demo.scss
index 0a0337ee419c..2dc75c934f18 100644
--- a/src/demo-app/tabs/tabs-demo.scss
+++ b/src/demo-app/tabs/tabs-demo.scss
@@ -16,7 +16,7 @@
   .md-tab-header {
     background: #f9f9f9;
   }
-  .md-tab-body {
+  .md-tab-body-content {
     padding: 12px;
   }
 }
\ No newline at end of file
diff --git a/src/demo-app/tabs/tabs-demo.ts b/src/demo-app/tabs/tabs-demo.ts
index da9988ddd371..488f28082077 100644
--- a/src/demo-app/tabs/tabs-demo.ts
+++ b/src/demo-app/tabs/tabs-demo.ts
@@ -18,9 +18,21 @@ export class TabsDemo {
   activeLinkIndex = 0;
 
   tabs = [
-    {label: 'Tab One', content: 'This is the body of the first tab'},
-    {label: 'Tab Two', content: 'This is the body of the second tab'},
-    {label: 'Tab Three', content: 'This is the body of the third tab'},
+    {
+      label: 'Tab One',
+      content: 'This is the body of the first tab'},
+    {
+      label: 'Tab Two',
+      disabled: true,
+      content: 'This is the body of the second tab'},
+    {
+      label: 'Tab Three',
+      extraContent: true,
+      content: 'This is the body of the third tab'},
+    {
+      label: 'Tab Four',
+      content: 'This is the body of the fourth tab'
+    },
   ];
 
   asyncTabs: Observable<any>;
diff --git a/src/lib/core/portal/portal-directives.ts b/src/lib/core/portal/portal-directives.ts
index dab58967322e..75feb45f10eb 100644
--- a/src/lib/core/portal/portal-directives.ts
+++ b/src/lib/core/portal/portal-directives.ts
@@ -57,7 +57,9 @@ export class PortalHostDirective extends BasePortalHost implements OnDestroy {
   }
 
   set portal(p: Portal<any>) {
-    this._replaceAttachedPortal(p);
+    if (p) {
+      this._replaceAttachedPortal(p);
+    }
   }
 
   ngOnDestroy() {
diff --git a/src/lib/core/style/_layout-common.scss b/src/lib/core/style/_layout-common.scss
new file mode 100644
index 000000000000..4748f3b6fb80
--- /dev/null
+++ b/src/lib/core/style/_layout-common.scss
@@ -0,0 +1,8 @@
+// This mixin ensures an element spans to fill the nearest ancestor with defined positioning.
+@mixin md-fill {
+  position: absolute;
+  top: 0;
+  left: 0;
+  right: 0;
+  bottom: 0;
+}
diff --git a/src/lib/core/style/_sidenav-common.scss b/src/lib/core/style/_sidenav-common.scss
deleted file mode 100644
index 1499cfc6bdde..000000000000
--- a/src/lib/core/style/_sidenav-common.scss
+++ /dev/null
@@ -1,8 +0,0 @@
-// This mixin ensures an element spans the whole viewport.
-@mixin md-fullscreen {
-  position: fixed;
-  top: 0;
-  left: 0;
-  right: 0;
-  bottom: 0;
-}
diff --git a/src/lib/menu/menu.scss b/src/lib/menu/menu.scss
index a9e4ba09670d..8dfc6096a723 100644
--- a/src/lib/menu/menu.scss
+++ b/src/lib/menu/menu.scss
@@ -2,7 +2,7 @@
 // TODO(kara): animation for menu opening
 
 @import '../core/style/button-common';
-@import '../core/style/sidenav-common';
+@import '../core/style/layout-common';
 @import '../core/style/menu-common';
 
 $md-menu-vertical-padding: 8px !default;
diff --git a/src/lib/sidenav/sidenav.scss b/src/lib/sidenav/sidenav.scss
index c38d47a4a00c..34b67918c9b8 100644
--- a/src/lib/sidenav/sidenav.scss
+++ b/src/lib/sidenav/sidenav.scss
@@ -1,6 +1,6 @@
 @import '../core/style/variables';
 @import '../core/style/elevation';
-@import '../core/style/sidenav-common';
+@import '../core/style/layout-common';
 
 
 // Mixin to help with defining LTR/RTL 'transform: translate3d()' values.
@@ -57,7 +57,7 @@ md-sidenav-layout {
 
   // TODO(hansl): Update this with a more robust solution.
   &[fullscreen] {
-    @include md-fullscreen();
+    @include md-fill();
 
     &.md-sidenav-opened {
       overflow: hidden;
@@ -66,7 +66,7 @@ md-sidenav-layout {
 }
 
 .md-sidenav-backdrop {
-  @include md-fullscreen();
+  @include md-fill();
 
   display: block;
 
diff --git a/src/lib/tabs/_tabs-common.scss b/src/lib/tabs/_tabs-common.scss
index 672cfa6495e2..fd6d640418d4 100644
--- a/src/lib/tabs/_tabs-common.scss
+++ b/src/lib/tabs/_tabs-common.scss
@@ -2,6 +2,8 @@
 
 $md-tab-bar-height: 48px !default;
 
+$md-tab-animation-duration: 500ms !default;
+
 // Mixin styles for labels that are contained within the tab header.
 @mixin tab-label {
   line-height: $md-tab-bar-height;
@@ -36,5 +38,5 @@ $md-tab-bar-height: 48px !default;
   position: absolute;
   bottom: 0;
   height: 2px;
-  transition: 350ms ease-out;
-}
\ No newline at end of file
+  transition: $md-tab-animation-duration $ease-in-out-curve-function;
+}
diff --git a/src/lib/tabs/tab-body.html b/src/lib/tabs/tab-body.html
new file mode 100644
index 000000000000..2d89174484c7
--- /dev/null
+++ b/src/lib/tabs/tab-body.html
@@ -0,0 +1,6 @@
+<div class="md-tab-body-content"
+     [@translateTab]="_position"
+     (@translateTab.start)="_onTranslateTabStarted($event)"
+     (@translateTab.done)="_onTranslateTabComplete($event)">
+  <template portalHost></template>
+</div>
diff --git a/src/lib/tabs/tab-group.html b/src/lib/tabs/tab-group.html
index 6acbed0769f4..370373d22077 100644
--- a/src/lib/tabs/tab-group.html
+++ b/src/lib/tabs/tab-group.html
@@ -6,7 +6,7 @@
        [tabIndex]="selectedIndex == i ? 0 : -1"
        [attr.aria-controls]="_getTabContentId(i)"
        [attr.aria-selected]="selectedIndex == i"
-       [class.md-tab-active]="selectedIndex == i"
+       [class.md-tab-label-active]="selectedIndex == i"
        [class.md-tab-disabled]="tab.disabled"
        (click)="focusIndex = selectedIndex = i">
 
@@ -20,15 +20,15 @@
   </div>
   <md-ink-bar></md-ink-bar>
 </div>
-<div class="md-tab-body-wrapper">
-  <div class="md-tab-body"
-       role="tabpanel"
-       *ngFor="let tab of _tabs; let i = index"
-       [id]="_getTabContentId(i)"
-       [class.md-tab-active]="selectedIndex == i"
-       [attr.aria-labelledby]="_getTabLabelId(i)">
-    <template [ngIf]="selectedIndex == i">
-      <template [portalHost]="tab.content"></template>
-    </template>
-  </div>
+<div class="md-tab-body-wrapper" #tabBodyWrapper>
+  <md-tab-body role="tabpanel"
+               *ngFor="let tab of _tabs; let i = index"
+               [id]="_getTabContentId(i)"
+               [attr.aria-labelledby]="_getTabLabelId(i)"
+               [class.md-tab-body-active]="selectedIndex == i"
+               [md-tab-body-position]="i - selectedIndex"
+               [md-tab-body-content]="tab.content"
+               (onTabBodyCentered)="_removeTabBodyWrapperHeight()"
+               (onTabBodyCentering)="_setTabBodyWrapperHeight($event)">
+  </md-tab-body>
 </div>
diff --git a/src/lib/tabs/tab-group.scss b/src/lib/tabs/tab-group.scss
index 3e48ae569952..42a140d08751 100644
--- a/src/lib/tabs/tab-group.scss
+++ b/src/lib/tabs/tab-group.scss
@@ -1,4 +1,5 @@
 @import '../core/style/variables';
+@import '../core/style/layout-common';
 @import 'tabs-common';
 
 :host {
@@ -32,19 +33,24 @@ md-ink-bar {
 .md-tab-body-wrapper {
   position: relative;
   overflow: hidden;
-  flex-grow: 1;
   display: flex;
+  transition: height $md-tab-animation-duration $ease-in-out-curve-function;
 }
 
 // Wraps each tab body 
-.md-tab-body {
-  display: none;
-  overflow: auto;
-  box-sizing: border-box;
-  flex-grow: 1;
-  flex-shrink: 1;
-  &.md-tab-active {
-    display: block;
+md-tab-body {
+  @include md-fill;
+  display: block;
+  overflow: hidden;
+  &.md-tab-body-active {
+    position: relative;
+    overflow-x: hidden;
+    overflow-y: auto;
+    z-index: 1;
+    flex-grow: 1;
+  }
+  :host[md-dynamic-height] &.md-tab-body-active {
+    overflow-y: hidden;
   }
 }
 
diff --git a/src/lib/tabs/tab-group.spec.ts b/src/lib/tabs/tab-group.spec.ts
index 1a635d9706bb..f4e8adfeca9f 100644
--- a/src/lib/tabs/tab-group.spec.ts
+++ b/src/lib/tabs/tab-group.spec.ts
@@ -1,11 +1,16 @@
-import {async, fakeAsync, tick, ComponentFixture, TestBed} from '@angular/core/testing';
+import {
+    async, fakeAsync, tick, ComponentFixture, TestBed,
+    flushMicrotasks
+} from '@angular/core/testing';
 import {MdTabGroup, MdTabsModule} from './tabs';
 import {Component, ViewChild} from '@angular/core';
 import {By} from '@angular/platform-browser';
 import {Observable} from 'rxjs/Observable';
+import {LayoutDirection, Dir} from '../core/rtl/dir';
 
 
 describe('MdTabGroup', () => {
+  let dir: LayoutDirection = 'ltr';
 
   beforeEach(async(() => {
     TestBed.configureTestingModule({
@@ -16,6 +21,11 @@ describe('MdTabGroup', () => {
         DisabledTabsTestApp,
         TabGroupWithSimpleApi,
       ],
+      providers: [
+        {provide: Dir, useFactory: () => {
+          return {value: dir};
+        }}
+      ]
     });
 
     TestBed.compileComponents();
@@ -136,6 +146,87 @@ describe('MdTabGroup', () => {
       expect(component.handleSelection).toHaveBeenCalledTimes(1);
       expect(component.selectEvent.index).toBe(2);
     }));
+
+    it('should update tab positions and attach content when selected', fakeAsync(() => {
+      fixture.detectChanges();
+      const tabComponent = fixture.debugElement.query(By.css('md-tab-group')).componentInstance;
+      const tabBodyList = fixture.debugElement.queryAll(By.css('md-tab-body'));
+
+      // Begin on the second tab
+      flushMicrotasks();  // finish animation
+
+      expect(tabBodyList[0].componentInstance._position).toBe('left');
+      expect(tabBodyList[0].componentInstance._content.isAttached).toBe(false);
+
+      expect(tabBodyList[1].componentInstance._position).toBe('center');
+      expect(tabBodyList[1].componentInstance._content.isAttached).toBe(true);
+
+      expect(tabBodyList[2].componentInstance._position).toBe('right');
+      expect(tabBodyList[2].componentInstance._content.isAttached).toBe(false);
+
+      // Move to third tab
+      tabComponent.selectedIndex = 2;
+      fixture.detectChanges();
+      flushMicrotasks();  // finish animation
+
+      expect(tabBodyList[0].componentInstance._position).toBe('left');
+      expect(tabBodyList[0].componentInstance._content.isAttached).toBe(false);
+
+      expect(tabBodyList[1].componentInstance._position).toBe('left');
+      expect(tabBodyList[1].componentInstance._content.isAttached).toBe(false);
+
+      expect(tabBodyList[2].componentInstance._position).toBe('center');
+      expect(tabBodyList[2].componentInstance._content.isAttached).toBe(true);
+
+      // Move to the first tab
+      tabComponent.selectedIndex = 0;
+      fixture.detectChanges();
+      flushMicrotasks();  // finish animation
+
+      // Check that the tab bodies have correctly positions themselves
+      expect(tabBodyList[0].componentInstance._position).toBe('center');
+      expect(tabBodyList[0].componentInstance._content.isAttached).toBe(true);
+
+      expect(tabBodyList[1].componentInstance._position).toBe('right');
+      expect(tabBodyList[1].componentInstance._content.isAttached).toBe(false);
+
+      expect(tabBodyList[2].componentInstance._position).toBe('right');
+      expect(tabBodyList[2].componentInstance._content.isAttached).toBe(false);
+    }));
+
+
+    it('should support RTL for the tab positions', fakeAsync(() => {
+      dir = 'rtl';
+      fixture.detectChanges();
+      const tabComponent = fixture.debugElement.query(By.css('md-tab-group')).componentInstance;
+      const tabBodyList = fixture.debugElement.queryAll(By.css('md-tab-body'));
+
+      // Begin on the second tab
+      flushMicrotasks();  // finish animation
+
+      expect(tabBodyList[0].componentInstance._position).toBe('right');
+      expect(tabBodyList[1].componentInstance._position).toBe('center');
+      expect(tabBodyList[2].componentInstance._position).toBe('left');
+
+      // Move to third tab
+      tabComponent.selectedIndex = 2;
+      fixture.detectChanges();
+      flushMicrotasks();  // finish animation
+
+      expect(tabBodyList[0].componentInstance._position).toBe('right');
+      expect(tabBodyList[1].componentInstance._position).toBe('right');
+      expect(tabBodyList[2].componentInstance._position).toBe('center');
+
+      // Move to the first tab
+      tabComponent.selectedIndex = 0;
+      fixture.detectChanges();
+      flushMicrotasks();  // finish animation
+
+      // Check that the tab bodies have correctly positions themselves
+      expect(tabBodyList[0].componentInstance._position).toBe('center');
+      expect(tabBodyList[1].componentInstance._position).toBe('left');
+      expect(tabBodyList[2].componentInstance._position).toBe('left');
+    }));
   });
 
   describe('disabled tabs', () => {
@@ -278,8 +369,8 @@ describe('MdTabGroup', () => {
   });
 
   /**
-   * Checks that the `selectedIndex` has been updated; checks that the label and body have the
-   * `md-tab-active` class
+   * Checks that the `selectedIndex` has been updated; checks that the label and body have their
+   * respective `active` classes
    */
   function checkSelectedIndex(index: number, fixture: ComponentFixture<any>) {
     fixture.detectChanges();
@@ -290,19 +381,19 @@ describe('MdTabGroup', () => {
 
     let tabLabelElement = fixture.debugElement
         .query(By.css(`.md-tab-label:nth-of-type(${index + 1})`)).nativeElement;
-    expect(tabLabelElement.classList.contains('md-tab-active')).toBe(true);
+    expect(tabLabelElement.classList.contains('md-tab-label-active')).toBe(true);
 
     let tabContentElement = fixture.debugElement
-        .query(By.css(`#${tabLabelElement.id}`)).nativeElement;
-    expect(tabContentElement.classList.contains('md-tab-active')).toBe(true);
+        .query(By.css(`md-tab-body:nth-of-type(${index + 1})`)).nativeElement;
+    expect(tabContentElement.classList.contains('md-tab-body-active')).toBe(true);
   }
 
   function getSelectedLabel(fixture: ComponentFixture<any>): HTMLElement {
-    return fixture.nativeElement.querySelector('.md-tab-label.md-tab-active');
+    return fixture.nativeElement.querySelector('.md-tab-label-active');
   }
 
   function getSelectedContent(fixture: ComponentFixture<any>): HTMLElement {
-    return fixture.nativeElement.querySelector('.md-tab-body.md-tab-active');
+    return fixture.nativeElement.querySelector('.md-tab-body-active');
   }
 });
 
diff --git a/src/lib/tabs/tabs.ts b/src/lib/tabs/tabs.ts
index 8c88f1cc1d78..fa287c929dec 100644
--- a/src/lib/tabs/tabs.ts
+++ b/src/lib/tabs/tabs.ts
@@ -14,6 +14,15 @@ import {
     TemplateRef,
     ViewContainerRef,
     OnInit,
+    trigger,
+    state,
+    style,
+    animate,
+    transition,
+    AnimationTransitionEvent,
+    ElementRef,
+    Renderer,
+    Optional,
 } from '@angular/core';
 import {CommonModule} from '@angular/common';
 import {
@@ -23,6 +32,9 @@ import {
     LEFT_ARROW,
     ENTER,
     coerceBooleanProperty,
+    PortalHostDirective,
+    Dir,
+    LayoutDirection
 } from '../core';
 import {MdTabLabel} from './tab-label';
 import {MdTabLabelWrapper} from './tab-label-wrapper';
@@ -82,7 +94,7 @@ export class MdTab implements OnInit {
   moduleId: module.id,
   selector: 'md-tab-group',
   templateUrl: 'tab-group.html',
-  styleUrls: ['tab-group.css'],
+  styleUrls: ['tab-group.css']
 })
 export class MdTabGroup {
   @ContentChildren(MdTab) _tabs: QueryList<MdTab>;
@@ -90,11 +102,23 @@ export class MdTabGroup {
   @ViewChildren(MdTabLabelWrapper) _labelWrappers: QueryList<MdTabLabelWrapper>;
   @ViewChildren(MdInkBar) _inkBar: QueryList<MdInkBar>;
 
+  @ViewChild('tabBodyWrapper') _tabBodyWrapper: ElementRef;
+
   private _isInitialized: boolean = false;
 
+  /** Snapshot of the height of the tab body wrapper before another tab is activated. */
+  private _tabBodyWrapperHeight: number = 0;
+
+  /** Whether the tab group should grow to the size of the active tab */
+  private _dynamicHeight: boolean = false;
+  @Input('md-dynamic-height') set dynamicHeight(value: boolean) {
+    this._dynamicHeight = coerceBooleanProperty(value);
+  }
+
+  /** The index of the active tab. */
   private _selectedIndex: number = 0;
-  @Input()
-  set selectedIndex(value: number) {
+  @Input() set selectedIndex(value: number) {
+    this._tabBodyWrapperHeight = this._tabBodyWrapper.nativeElement.clientHeight;
     if (value != this._selectedIndex && this.isValidIndex(value)) {
       this._selectedIndex = value;
 
@@ -107,19 +131,6 @@ export class MdTabGroup {
     return this._selectedIndex;
   }
 
-  /**
-   * Determines if an index is valid.  If the tabs are not ready yet, we assume that the user is
-   * providing a valid index and return true.
-   */
-  isValidIndex(index: number): boolean {
-    if (this._tabs) {
-      const tab = this._tabs.toArray()[index];
-      return tab && !tab.disabled;
-    } else {
-      return true;
-    }
-  }
-
   /** Output to enable support for two-way binding on `selectedIndex`. */
   @Output() get selectedIndexChange(): Observable<number> {
     return this.selectChange.map(event => event.index);
@@ -138,7 +149,7 @@ export class MdTabGroup {
   private _focusIndex: number = 0;
   private _groupId: number;
 
-  constructor(private _zone: NgZone) {
+  constructor(private _zone: NgZone, private _renderer: Renderer) {
     this._groupId = nextId++;
   }
 
@@ -156,6 +167,19 @@ export class MdTabGroup {
     this._isInitialized = true;
   }
 
+  /**
+   * Determines if an index is valid.  If the tabs are not ready yet, we assume that the user is
+   * providing a valid index and return true.
+   */
+  isValidIndex(index: number): boolean {
+    if (this._tabs) {
+      const tab = this._tabs.toArray()[index];
+      return tab && !tab.disabled;
+    } else {
+      return true;
+    }
+  }
+
   /** Tells the ink-bar to align itself to the current label wrapper */
   private _updateInkBar(): void {
     this._inkBar.toArray()[0].alignToElement(this._currentLabelWrapper);
@@ -191,25 +215,6 @@ export class MdTabGroup {
     }
   }
 
-  private _createChangeEvent(index: number): MdTabChangeEvent {
-    const event = new MdTabChangeEvent;
-    event.index = index;
-    if (this._tabs && this._tabs.length) {
-      event.tab = this._tabs.toArray()[index];
-    }
-    return event;
-  }
-
-  /** Returns a unique id for each tab label element */
-  _getTabLabelId(i: number): string {
-    return `md-tab-label-${this._groupId}-${i}`;
-  }
-
-  /** Returns a unique id for each tab content element */
-  _getTabContentId(i: number): string {
-    return `md-tab-content-${this._groupId}-${i}`;
-  }
-
   handleKeydown(event: KeyboardEvent) {
     switch (event.keyCode) {
       case RIGHT_ARROW:
@@ -248,15 +253,133 @@ export class MdTabGroup {
   focusPreviousTab(): void {
     this.moveFocus(-1);
   }
+
+  private _createChangeEvent(index: number): MdTabChangeEvent {
+    const event = new MdTabChangeEvent;
+    event.index = index;
+    if (this._tabs && this._tabs.length) {
+      event.tab = this._tabs.toArray()[index];
+    }
+    return event;
+  }
+
+  /** Returns a unique id for each tab label element */
+  _getTabLabelId(i: number): string {
+    return `md-tab-label-${this._groupId}-${i}`;
+  }
+
+  /** Returns a unique id for each tab content element */
+  _getTabContentId(i: number): string {
+    return `md-tab-content-${this._groupId}-${i}`;
+  }
+
+  /**
+   * Sets the height of the body wrapper to the height of the activating tab if dynamic
+   * height property is true.
+   */
+  _setTabBodyWrapperHeight(tabHeight: number): void {
+    if (!this._dynamicHeight) { return; }
+
+    this._renderer.setElementStyle(this._tabBodyWrapper.nativeElement, 'height',
+        this._tabBodyWrapperHeight + 'px');
+
+    // This conditional forces the browser to paint the height so that
+    // the animation to the new height can have an origin.
+    if (this._tabBodyWrapper.nativeElement.offsetHeight) {
+      this._renderer.setElementStyle(this._tabBodyWrapper.nativeElement, 'height',
+          tabHeight + 'px');
+    }
+  }
+
+  /** Removes the height of the tab body wrapper. */
+  _removeTabBodyWrapperHeight(): void {
+    this._renderer.setElementStyle(this._tabBodyWrapper.nativeElement, 'height', '');
+  }
 }
 
+export type MdTabBodyActiveState = 'left' | 'center' | 'right';
+
+@Component({
+  moduleId: module.id,
+  selector: 'md-tab-body',
+  templateUrl: 'tab-body.html',
+  animations: [
+    trigger('translateTab', [
+      state('left', style({transform: 'translate3d(-100%, 0, 0)'})),
+      state('center', style({transform: 'translate3d(0, 0, 0)'})),
+      state('right', style({transform: 'translate3d(100%, 0, 0)'})),
+      transition('* => *', animate('500ms cubic-bezier(0.35, 0, 0.25, 1)')),
+    ])
+  ]
+})
+export class MdTabBody implements OnInit {
+  /** The portal host inside of this container into which the tab body content will be loaded. */
+  @ViewChild(PortalHostDirective) _portalHost: PortalHostDirective;
+
+  /** Event emitted when the tab begins to animate towards the center as the active tab. */
+  @Output()
+  onTabBodyCentering: EventEmitter<number> = new EventEmitter<number>();
+
+  /** Event emitted when the tab completes its animation towards the center. */
+  @Output()
+  onTabBodyCentered: EventEmitter<void> = new EventEmitter<void>();
+
+  /** The tab body content to display. */
+  @Input('md-tab-body-content') _content: TemplatePortal;
+
+  /** The shifted index position of the tab body, where zero represents the active center tab. */
+  _position: MdTabBodyActiveState;
+  @Input('md-tab-body-position') set position(v: number) {
+    if (v < 0) {
+      this._position = this.getLayoutDirection() == 'ltr' ? 'left' : 'right';
+    } else if (v > 0) {
+      this._position = this.getLayoutDirection() == 'ltr' ? 'right' : 'left';
+    } else {
+      this._position = 'center';
+    }
+
+    if (this._position === 'center' && !this._portalHost.hasAttached() && this._content) {
+      this._portalHost.attach(this._content);
+    }
+  }
+
+  constructor(private _elementRef: ElementRef, @Optional() private _dir: Dir) {}
+
+  ngOnInit() {
+    if (this._position == 'center' && !this._portalHost.hasAttached()) {
+      this._portalHost.attach(this._content);
+    }
+  }
+
+  _onTranslateTabStarted(e: AnimationTransitionEvent) {
+    if (e.fromState != 'void' && e.toState == 'center') {
+      this.onTabBodyCentering.emit(this._elementRef.nativeElement.clientHeight);
+    }
+  }
+
+  _onTranslateTabComplete(e: AnimationTransitionEvent) {
+    if ((e.toState == 'left' || e.toState == 'right') && this._position !== 'center') {
+      // If the end state is that the tab is not centered, then detach the content.
+      this._portalHost.detach();
+    }
+
+    if ((e.toState == 'center') && this._position == 'center') {
+      this.onTabBodyCentered.emit();
+    }
+  }
+
+  /** The text direction of the containing app. */
+  getLayoutDirection(): LayoutDirection {
+    return this._dir && this._dir.value === 'rtl' ? 'rtl' : 'ltr';
+  }
+}
 
 @NgModule({
   imports: [CommonModule, PortalModule],
   // Don't export MdInkBar or MdTabLabelWrapper, as they are internal implementation details.
   exports: [MdTabGroup, MdTabLabel, MdTab, MdTabNavBar, MdTabLink],
   declarations: [MdTabGroup, MdTabLabel, MdTab, MdInkBar, MdTabLabelWrapper,
-    MdTabNavBar, MdTabLink],
+    MdTabNavBar, MdTabLink, MdTabBody],
 })
 export class MdTabsModule {
   static forRoot(): ModuleWithProviders {