diff --git a/src/vs/workbench/common/editor/untitledEditorInput.ts b/src/vs/workbench/common/editor/untitledEditorInput.ts
index f63ef3249cd..ba09dc49bb2 100644
--- a/src/vs/workbench/common/editor/untitledEditorInput.ts
+++ b/src/vs/workbench/common/editor/untitledEditorInput.ts
@@ -92,7 +92,7 @@ export class UntitledEditorInput extends AbstractUntitledEditorInput {
 
 	public suggestFileName(): string {
 		if (!this.hasAssociatedFilePath) {
-			let mime = this.getMime();
+			const mime = this.getMime();
 			if (mime && mime !== MIME_TEXT /* do not suggest when the mime type is simple plain text */) {
 				return suggestFilename(mime, this.getName());
 			}
@@ -131,7 +131,7 @@ export class UntitledEditorInput extends AbstractUntitledEditorInput {
 		}
 
 		// Otherwise Create Model and load
-		let model = this.createModel();
+		const model = this.createModel();
 		return model.load().then((resolvedModel: UntitledEditorModel) => {
 			this.cachedModel = resolvedModel;
 
@@ -140,10 +140,10 @@ export class UntitledEditorInput extends AbstractUntitledEditorInput {
 	}
 
 	private createModel(): UntitledEditorModel {
-		let content = '';
+		const content = '';
 		let mime = this.modeId;
 		if (!mime && this.hasAssociatedFilePath) {
-			let mimeFromPath = guessMimeTypes(this.resource.fsPath)[0];
+			const mimeFromPath = guessMimeTypes(this.resource.fsPath)[0];
 			if (!isUnspecific(mimeFromPath)) {
 				mime = mimeFromPath; // take most specific mime type if file path is associated and mime is specific
 			}
@@ -163,7 +163,7 @@ export class UntitledEditorInput extends AbstractUntitledEditorInput {
 		}
 
 		if (otherInput instanceof UntitledEditorInput) {
-			let otherUntitledEditorInput = <UntitledEditorInput>otherInput;
+			const otherUntitledEditorInput = <UntitledEditorInput>otherInput;
 
 			// Otherwise compare by properties
 			return otherUntitledEditorInput.resource.toString() === this.resource.toString();
diff --git a/src/vs/workbench/common/editor/untitledEditorModel.ts b/src/vs/workbench/common/editor/untitledEditorModel.ts
index 9b53bcbe6a9..42192160cd2 100644
--- a/src/vs/workbench/common/editor/untitledEditorModel.ts
+++ b/src/vs/workbench/common/editor/untitledEditorModel.ts
@@ -9,6 +9,7 @@ import {TPromise} from 'vs/base/common/winjs.base';
 import {EditorModel, IEncodingSupport} from 'vs/workbench/common/editor';
 import {StringEditorModel} from 'vs/workbench/common/editor/stringEditorModel';
 import URI from 'vs/base/common/uri';
+import {IModelContentChangedEvent2} from 'vs/editor/common/editorCommon';
 import {EventType, EndOfLinePreference} from 'vs/editor/common/editorCommon';
 import {EventType as WorkbenchEventType, ResourceEvent} from 'vs/workbench/common/events';
 import {IFilesConfiguration} from 'vs/platform/files/common/files';
@@ -30,6 +31,8 @@ export class UntitledEditorModel extends StringEditorModel implements IEncodingS
 	private configuredEncoding: string;
 	private preferredEncoding: string;
 
+	private hasAssociatedFilePath: boolean;
+
 	constructor(
 		value: string,
 		mime: string,
@@ -42,6 +45,7 @@ export class UntitledEditorModel extends StringEditorModel implements IEncodingS
 	) {
 		super(value, mime, resource, modeService, modelService);
 
+		this.hasAssociatedFilePath = hasAssociatedFilePath;
 		this.dirty = hasAssociatedFilePath; // untitled associated to file path are dirty right away
 
 		this._onDidChangeDirty = new Emitter<void>();
@@ -92,7 +96,7 @@ export class UntitledEditorModel extends StringEditorModel implements IEncodingS
 	}
 
 	public setEncoding(encoding: string): void {
-		let oldEncoding = this.getEncoding();
+		const oldEncoding = this.getEncoding();
 		this.preferredEncoding = encoding;
 
 		// Emit if it changed
@@ -119,7 +123,7 @@ export class UntitledEditorModel extends StringEditorModel implements IEncodingS
 			this.configuredEncoding = configuration && configuration.files && configuration.files.encoding;
 
 			// Listen to content changes
-			this.textModelChangeListener = this.textEditorModel.onDidChangeContent(() => this.onModelContentChanged());
+			this.textModelChangeListener = this.textEditorModel.onDidChangeContent(e => this.onModelContentChanged(e));
 
 			// Emit initial dirty event if we are
 			if (this.dirty) {
@@ -132,11 +136,20 @@ export class UntitledEditorModel extends StringEditorModel implements IEncodingS
 		});
 	}
 
-	private onModelContentChanged(): void {
+	private onModelContentChanged(e:IModelContentChangedEvent2): void {
+
+		// turn dirty if we were not
 		if (!this.dirty) {
 			this.dirty = true;
 			this._onDidChangeDirty.fire();
 		}
+
+		// mark the untitled editor as non-dirty once its content becomes empty and we do
+		// not have an associated path set
+		else if (!this.hasAssociatedFilePath && !e.text && this.textEditorModel.getValueLength() === 0) {
+			this.dirty = false;
+			this._onDidChangeDirty.fire();
+		}
 	}
 
 	public dispose(): void {
diff --git a/src/vs/workbench/services/untitled/common/untitledEditorService.ts b/src/vs/workbench/services/untitled/common/untitledEditorService.ts
index 0b522fd1960..969f8b62474 100644
--- a/src/vs/workbench/services/untitled/common/untitledEditorService.ts
+++ b/src/vs/workbench/services/untitled/common/untitledEditorService.ts
@@ -109,7 +109,7 @@ export class UntitledEditorService implements IUntitledEditorService {
 	}
 
 	public isDirty(resource: URI): boolean {
-		let input = this.get(resource);
+		const input = this.get(resource);
 
 		return input && input.isDirty();
 	}
@@ -152,7 +152,7 @@ export class UntitledEditorService implements IUntitledEditorService {
 			} while (Object.keys(UntitledEditorService.CACHE).indexOf(resource.toString()) >= 0);
 		}
 
-		let input = this.instantiationService.createInstance(UntitledEditorInput, resource, hasAssociatedFilePath, modeId);
+		const input = this.instantiationService.createInstance(UntitledEditorInput, resource, hasAssociatedFilePath, modeId);
 
 		const listener = input.onDidChangeDirty(() => {
 			this._onDidChangeDirty.fire(new UntitledEditorEvent(resource));