diff --git a/History.txt b/History.txt
index e4b7dacf..395d8e71 100644
--- a/History.txt
+++ b/History.txt
@@ -3,6 +3,7 @@
     * Added --server option to start a simple WEBrick server on destination directory [github.com/johnreilly and github.com/mchung]
   * Minor Enhancements
     * Added post categories based on directories containing _posts [github.com/mreid]
+    * Added post topics based on directories underneath _posts
     * Added new date filter that shows the full month name [github.com/mreid]
     * Merge Post's YAML front matter into its to_liquid payload [github.com/remi]
     * Restrict includes to regular files underneath _includes
diff --git a/README.textile b/README.textile
index c07e6f67..6459aa1f 100644
--- a/README.textile
+++ b/README.textile
@@ -53,12 +53,11 @@ filename is used to construct the URL in the generated site. The example post,
 for instance, ends up at
 <code>http://tom.preston-werner.com/2008/11/17/blogging-like-a-hacker.html</code>.
 
-Categories for posts are derived from the directory structure the posts were 
-found within.
-A post that appears in the directory foo/bar/_posts is placed in the categories
-'foo' and 'bar'.
-By selecting posts from particular categories in your Liquid templates, you will
-be able to host multiple blogs within a site.
+Categories for posts are derived from the directory structure the posts were
+found within. A post that appears in the directory foo/bar/_posts is placed in
+the categories 'foo' and 'bar'. By selecting posts from particular categories
+in your Liquid templates, you will be able to host multiple blogs within a
+site.
 
 Files that do not reside in directories prefixed with an underscore are
 mirrored into a corresponding directory structure in the generated site. If a
@@ -182,7 +181,7 @@ h3. Site
     --lsi (latent semantic indexing) option.
 
   site.categories.CATEGORY
-    The list of all posts in category CATEGORY.
+    The list of all Posts in category CATEGORY.
 
 h3. Post
 
@@ -200,12 +199,21 @@ h3. Post
     An identifier unique to the Post (useful in RSS feeds).
     e.g. /2008/12/14/my-post
 
+  post.categories
+    The list of categories to which this post belongs. Categories are
+    derived from the directory structure above the _posts directory. For
+    example, a post at /work/code/_posts/2008-12-24-closures.textile
+    would have this field set to ['work', 'code'].
+
+  post.topics
+    The list of topics for this Post. Topics are derived from the directory
+    structure beneath the _posts directory. For example, a post at
+    /_posts/music/metal/2008-12-24-metalocalypse.textile would have this field
+    set to ['music', 'metal'].
+
   post.content
     The content of the Post.
 
-  post.categories
-    The list of categories to which this post belongs.
-
 h2. YAML Front Matter
 
 Any files that contain a YAML front matter block will be processed by Jekyll
diff --git a/lib/jekyll/post.rb b/lib/jekyll/post.rb
index 76f3cf85..53bcbb22 100644
--- a/lib/jekyll/post.rb
+++ b/lib/jekyll/post.rb
@@ -8,7 +8,7 @@ module Jekyll
       attr_accessor :lsi
     end
     
-    MATCHER = /^(\d+-\d+-\d+)-(.*)(\.[^.]+)$/
+    MATCHER = /^(.+\/)*(\d+-\d+-\d+)-(.*)(\.[^.]+)$/
     
     # Post name validator. Post filenames must be like:
     #   2008-11-05-my-awesome-post.textile
@@ -18,7 +18,7 @@ module Jekyll
       name =~ MATCHER
     end
     
-    attr_accessor :date, :slug, :ext, :categories
+    attr_accessor :date, :slug, :ext, :categories, :topics
     attr_accessor :data, :content, :output
     
     # Initialize this Post instance.
@@ -27,15 +27,17 @@ module Jekyll
     #   +categories+ is an Array of Strings for the categories for this post
     #
     # Returns <Post>
-    def initialize(base, name)
-      @base = base
+    def initialize(source, dir, name)
+      @base = File.join(source, dir, '_posts')
       @name = name
-      @categories = base.split('/').reject { |p| ['.', '_posts'].include? p }
+      
+      self.categories = dir.split('/').reject { |x| x.empty? }
+      
+      parts = name.split('/')
+      self.topics = parts.size > 1 ? parts[0..-2] : []
       
       self.process(name)
-      self.read_yaml(base, name)
-      #Removed to avoid munging of liquid tags, replaced in convertible.rb#48
-      #self.transform
+      self.read_yaml(@base, name)
     end
     
     # Spaceship is based on Post#date
@@ -50,7 +52,7 @@ module Jekyll
     #
     # Returns nothing
     def process(name)
-      m, date, slug, ext = *name.match(MATCHER)
+      m, cats, date, slug, ext = *name.match(MATCHER)
       self.date = Time.parse(date)
       self.slug = slug
       self.ext = ext
@@ -63,11 +65,11 @@ module Jekyll
     #
     # Returns <String>
     def dir
-      path = (@categories && !@categories.empty?) ? '/' + @categories.join('/') : ''
       if permalink
         permalink.to_s.split("/")[0..-2].join("/")
       else
-        "#{path}" + date.strftime("/%Y/%m/%d/")
+        prefix = self.categories.empty? ? '' : '/' + self.categories.join('/')
+        prefix + date.strftime("/%Y/%m/%d/")
       end
     end
     
@@ -156,6 +158,7 @@ module Jekyll
         "url" => self.url,
         "date" => self.date,
         "id" => self.id,
+        "topics" => self.topics,
         "content" => self.content }.merge(self.data)
     end
   end
diff --git a/lib/jekyll/site.rb b/lib/jekyll/site.rb
index f511fba7..bbd73391 100644
--- a/lib/jekyll/site.rb
+++ b/lib/jekyll/site.rb
@@ -49,14 +49,17 @@ module Jekyll
     # object with each one.
     #
     # Returns nothing
-    def read_posts(base)
-      entries = Dir.entries(base)
+    def read_posts(dir)
+      base = File.join(self.source, dir, '_posts')
+      
+      entries = []
+      Dir.chdir(base) { entries = Dir['**/*'] }
       entries = entries.reject { |e| File.directory?(File.join(base, e)) }
 
       # first pass processes, but does not yet render post content
       entries.each do |f|
         if Post.valid?(f)
-          post = Post.new(base, f)
+          post = Post.new(self.source, dir, f)
           self.posts << post
         end
       end
@@ -98,7 +101,7 @@ module Jekyll
       # might not be available yet to other templates as {{ site.posts }}
       if entries.include?('_posts')
         entries.delete('_posts')
-        read_posts(File.join(base, '_posts'))
+        read_posts(dir)
       end
 
       entries.each do |f|
@@ -128,9 +131,9 @@ module Jekyll
     def site_payload
       # Build the category hash map of category ( names => arrays of posts )
       # then sort each array in reverse order
-      categories = Hash.new { |hash,key| hash[key] = Array.new } 
+      categories = Hash.new { |hash, key| hash[key] = Array.new }
       self.posts.each { |p| p.categories.each { |c| categories[c] << p } }
-      categories.values.map { |cats| cats.sort! { |a,b| b <=> a} } 
+      categories.values.map { |cats| cats.sort! { |a, b| b <=> a} }
       
       {"site" => {
         "time" => Time.now, 
diff --git a/test/test_post.rb b/test/test_post.rb
index d7e8eed8..01e1dd8b 100644
--- a/test/test_post.rb
+++ b/test/test_post.rb
@@ -7,6 +7,9 @@ class TestPost < Test::Unit::TestCase
   
   def test_valid
     assert Post.valid?("2008-10-19-foo-bar.textile")
+    assert Post.valid?("foo/bar/2008-10-19-foo-bar.textile")
+    
+    assert !Post.valid?("lol2008-10-19-foo-bar.textile")
     assert !Post.valid?("blah")
   end
   
@@ -21,6 +24,7 @@ class TestPost < Test::Unit::TestCase
   
   def test_url
     p = Post.allocate
+    p.categories = []
     p.process("2008-10-19-foo-bar.textile")
     
     assert_equal "/2008/10/19/foo-bar.html", p.url
@@ -60,7 +64,7 @@ class TestPost < Test::Unit::TestCase
   end
   
   def test_render
-    p = Post.new(File.join(File.dirname(__FILE__), *%w[source _posts]), "2008-10-18-foo-bar.textile")
+    p = Post.new(File.join(File.dirname(__FILE__), *%w[source]), '',  "2008-10-18-foo-bar.textile")
     layouts = {"default" => Layout.new(File.join(File.dirname(__FILE__), *%w[source _layouts]), "simple.html")}
     p.render(layouts, {"site" => {"posts" => []}})
     
@@ -70,23 +74,23 @@ class TestPost < Test::Unit::TestCase
   def test_write
     clear_dest
     
-    p = Post.new(File.join(File.dirname(__FILE__), *%w[source _posts]), "2008-10-18-foo-bar.textile")
+    p = Post.new(File.join(File.dirname(__FILE__), *%w[source]), '', "2008-10-18-foo-bar.textile")
     layouts = {"default" => Layout.new(File.join(File.dirname(__FILE__), *%w[source _layouts]), "simple.html")}
     p.render(layouts, {"site" => {"posts" => []}})
     p.write(dest_dir)
   end
   
   def test_data
-    p = Post.new(File.join(File.dirname(__FILE__), *%w[source _posts]), "2008-11-21-complex.textile")
+    p = Post.new(File.join(File.dirname(__FILE__), *%w[source]), '', "2008-11-21-complex.textile")
     layouts = {"default" => Layout.new(File.join(File.dirname(__FILE__), *%w[source _layouts]), "simple.html")}
     p.render(layouts, {"site" => {"posts" => []}})
     
-    assert_equal "<<< <p>url: /test/source/2008/11/21/complex.html<br />\ndate: #{Time.parse("2008-11-21")}<br />\nid: /test/source/2008/11/21/complex</p> >>>", p.output
+    assert_equal "<<< <p>url: /2008/11/21/complex.html<br />\ndate: #{Time.parse("2008-11-21")}<br />\nid: /2008/11/21/complex</p> >>>", p.output
   end
   
   def test_include
     Jekyll.source = File.join(File.dirname(__FILE__), *%w[source])
-    p = Post.new(File.join(File.dirname(__FILE__), *%w[source _posts]), "2008-12-13-include.markdown")
+    p = Post.new(File.join(File.dirname(__FILE__), *%w[source]), '', "2008-12-13-include.markdown")
     layouts = {"default" => Layout.new(File.join(File.dirname(__FILE__), *%w[source _layouts]), "simple.html")}
     p.render(layouts, {"site" => {"posts" => []}})
     
diff --git a/test/test_site.rb b/test/test_site.rb
index bde6a008..52c1ca83 100644
--- a/test/test_site.rb
+++ b/test/test_site.rb
@@ -17,7 +17,7 @@ class TestSite < Test::Unit::TestCase
   end
  
   def test_read_posts
-    @s.read_posts(File.join(@s.source, '_posts'))
+    @s.read_posts('')
     
     assert_equal 4, @s.posts.size
   end