diff --git a/railties/lib/rails.rb b/railties/lib/rails.rb
index 41672325bd..c21434a100 100644
--- a/railties/lib/rails.rb
+++ b/railties/lib/rails.rb
@@ -29,8 +29,6 @@ else
   Encoding.default_external = Encoding::UTF_8
 end
 
-RAILS_ENV = (ENV["RAILS_ENV"] || ENV["RACK_ENV"] || "development").dup unless defined?(RAILS_ENV)
-
 module Rails
   autoload :Bootstrap, 'rails/bootstrap'
 
@@ -86,7 +84,7 @@ module Rails
     end
 
     def env
-      @_env ||= ActiveSupport::StringInquirer.new(RAILS_ENV)
+      @_env ||= ActiveSupport::StringInquirer.new(ENV["RAILS_ENV"] || ENV["RACK_ENV"] || "development")
     end
 
     def cache
diff --git a/railties/lib/rails/bootstrap.rb b/railties/lib/rails/bootstrap.rb
index 15d5b2b59d..3808695f10 100644
--- a/railties/lib/rails/bootstrap.rb
+++ b/railties/lib/rails/bootstrap.rb
@@ -38,6 +38,11 @@ module Rails
       config.load_once_paths.freeze
     end
 
+    # TODO: Wrap in deprecation warning, everyone should be using Rails.env now
+    initializer :set_rails_env do
+      silence_warnings { Object.const_set "RAILS_ENV", Rails.env }
+    end
+
     # Create tmp directories
     initializer :ensure_tmp_directories_exist do
       %w(cache pids sessions sockets).each do |dir_to_make|
@@ -71,7 +76,7 @@ module Rails
         begin
           logger = ActiveSupport::BufferedLogger.new(config.log_path)
           logger.level = ActiveSupport::BufferedLogger.const_get(config.log_level.to_s.upcase)
-          if RAILS_ENV == "production"
+          if Rails.env.production?
             logger.auto_flushing = false
           end
         rescue StandardError => e
diff --git a/railties/lib/rails/commands/console.rb b/railties/lib/rails/commands/console.rb
index d154808029..27ac7fd20a 100644
--- a/railties/lib/rails/commands/console.rb
+++ b/railties/lib/rails/commands/console.rb
@@ -4,8 +4,6 @@ require "irb/completion"
 
 module Rails
   class Console
-    ENVIRONMENTS = %w(production development test)
-
     def self.start(app)
       new(app).start
     end
@@ -25,10 +23,6 @@ module Rails
         opt.parse!(ARGV)
       end
 
-      if env = ARGV.pop
-        ENV['RAILS_ENV'] = ENVIRONMENTS.find { |e| e.index(env) } || env
-      end
-
       @app.initialize!
       require "rails/console_app"
       require "rails/console_sandbox" if options[:sandbox]
@@ -54,3 +48,8 @@ module Rails
     end
   end
 end
+
+# Has to set the RAILS_ENV before config/application is required
+if ARGV.first && !ARGV.first.index("-") && env = ARGV.pop # has to pop the env ARGV so IRB doesn't freak
+  ENV['RAILS_ENV'] = %w(production development test).find { |e| e.index(env) } || env
+end
diff --git a/railties/lib/rails/commands/dbconsole.rb b/railties/lib/rails/commands/dbconsole.rb
index 77c3404343..b836a17a49 100644
--- a/railties/lib/rails/commands/dbconsole.rb
+++ b/railties/lib/rails/commands/dbconsole.rb
@@ -34,7 +34,6 @@ module Rails
         abort opt.to_s unless (0..1).include?(ARGV.size)
       end
 
-      env = ARGV.first || ENV['RAILS_ENV'] || 'development'
       unless config = YAML::load(ERB.new(IO.read("#{@app.root}/config/database.yml")).result)[env]
         abort "No database is configured for the environment '#{env}'"
       end
@@ -97,4 +96,9 @@ module Rails
       end
     end
   end
+end
+
+# Has to set the RAILS_ENV before config/application is required
+if ARGV.first && !ARGV.first.index("-") && env = ARGV.first
+  ENV['RAILS_ENV'] = %w(production development test).find { |e| e.index(env) } || env
 end
\ No newline at end of file
diff --git a/railties/lib/rails/commands/runner.rb b/railties/lib/rails/commands/runner.rb
index 0246348c77..4487d2e7b1 100644
--- a/railties/lib/rails/commands/runner.rb
+++ b/railties/lib/rails/commands/runner.rb
@@ -34,7 +34,6 @@ end
 ARGV.delete(code_or_file)
 
 ENV["RAILS_ENV"] = options[:environment]
-RAILS_ENV.replace(options[:environment]) if defined?(RAILS_ENV)
 
 begin
   if code_or_file.nil?
diff --git a/railties/lib/rails/commands/server.rb b/railties/lib/rails/commands/server.rb
index 09d7207d51..b21ae2a17b 100644
--- a/railties/lib/rails/commands/server.rb
+++ b/railties/lib/rails/commands/server.rb
@@ -38,15 +38,14 @@ module Rails
     end
 
     def start
+      ENV["RAILS_ENV"] = options[:environment]
+
       puts "=> Booting #{ActiveSupport::Inflector.demodulize(server)}"
-      puts "=> Rails #{Rails.version} application starting on http://#{options[:Host]}:#{options[:Port]}"
+      puts "=> Rails #{Rails.version} application starting in #{Rails.env} on http://#{options[:Host]}:#{options[:Port]}"
       puts "=> Call with -d to detach" unless options[:daemonize]
       trap(:INT) { exit }
       puts "=> Ctrl-C to shutdown server" unless options[:daemonize]
 
-      ENV["RAILS_ENV"] = options[:environment]
-      RAILS_ENV.replace(options[:environment]) if defined?(RAILS_ENV)
-
       super
     ensure
       puts 'Exiting' unless options[:daemonize]
diff --git a/railties/lib/rails/configuration.rb b/railties/lib/rails/configuration.rb
index 800a8215b8..08f5dda8ee 100644
--- a/railties/lib/rails/configuration.rb
+++ b/railties/lib/rails/configuration.rb
@@ -129,7 +129,7 @@ module Rails
         paths.tmp.cache           "tmp/cache"
         paths.config              "config"
         paths.config.locales      "config/locales"
-        paths.config.environments "config/environments", :glob => "#{RAILS_ENV}.rb"
+        paths.config.environments "config/environments", :glob => "#{Rails.env}.rb"
         paths
       end
     end
@@ -212,7 +212,7 @@ module Rails
         paths = []
 
         # Add the old mock paths only if the directories exists
-        paths.concat(Dir["#{root}/test/mocks/#{RAILS_ENV}"]) if File.exists?("#{root}/test/mocks/#{RAILS_ENV}")
+        paths.concat(Dir["#{root}/test/mocks/#{Rails.env}"]) if File.exists?("#{root}/test/mocks/#{Rails.env}")
 
         # Add the app's controller directory
         paths.concat(Dir["#{root}/app/controllers/"])
@@ -235,15 +235,15 @@ module Rails
 
     def builtin_directories
       # Include builtins only in the development environment.
-      (RAILS_ENV == 'development') ? Dir["#{RAILTIES_PATH}/builtin/*/"] : []
+      Rails.env.development? ? Dir["#{RAILTIES_PATH}/builtin/*/"] : []
     end
 
     def log_path
-      @log_path ||= File.join(root, 'log', "#{RAILS_ENV}.log")
+      @log_path ||= File.join(root, 'log', "#{Rails.env}.log")
     end
 
     def log_level
-      @log_level ||= RAILS_ENV == 'production' ? :info : :debug
+      @log_level ||= Rails.env.production? ? :info : :debug
     end
 
     def time_zone
@@ -265,7 +265,7 @@ module Rails
     end
 
     def environment_path
-      "#{root}/config/environments/#{RAILS_ENV}.rb"
+      "#{root}/config/environments/#{Rails.env}.rb"
     end
 
     # Holds generators configuration:
diff --git a/railties/lib/rails/generators/rails/app/templates/script/console.tt b/railties/lib/rails/generators/rails/app/templates/script/console.tt
index 9ddd4cfe62..daba8ba2f1 100755
--- a/railties/lib/rails/generators/rails/app/templates/script/console.tt
+++ b/railties/lib/rails/generators/rails/app/templates/script/console.tt
@@ -1,3 +1,5 @@
-require File.expand_path('../../config/application',  __FILE__)
+require File.expand_path('../../config/boot',  __FILE__)
 require 'rails/commands/console'
+require File.expand_path('../../config/application',  __FILE__)
+
 Rails::Console.start(<%= app_const %>.instance)
diff --git a/railties/lib/rails/generators/rails/app/templates/script/dbconsole.tt b/railties/lib/rails/generators/rails/app/templates/script/dbconsole.tt
index 96e0bc191b..a7f114a97f 100755
--- a/railties/lib/rails/generators/rails/app/templates/script/dbconsole.tt
+++ b/railties/lib/rails/generators/rails/app/templates/script/dbconsole.tt
@@ -1,3 +1,5 @@
-require File.expand_path('../../config/application',  __FILE__)
+require File.expand_path('../../config/boot',  __FILE__)
 require 'rails/commands/dbconsole'
+require File.expand_path('../../config/application',  __FILE__)
+
 Rails::DBConsole.start(<%= app_const %>.instance)
diff --git a/railties/lib/rails/generators/rails/app/templates/script/runner b/railties/lib/rails/generators/rails/app/templates/script/runner
index 7a70828e90..3354ed4a28 100755
--- a/railties/lib/rails/generators/rails/app/templates/script/runner
+++ b/railties/lib/rails/generators/rails/app/templates/script/runner
@@ -1,2 +1,3 @@
-require File.expand_path('../../config/environment',  __FILE__)
+require File.expand_path('../../config/boot',  __FILE__)
 require 'rails/commands/runner'
+require File.expand_path('../../config/environment',  __FILE__)
diff --git a/railties/lib/rails/test_help.rb b/railties/lib/rails/test_help.rb
index e76c476bfb..350d0b3961 100644
--- a/railties/lib/rails/test_help.rb
+++ b/railties/lib/rails/test_help.rb
@@ -1,6 +1,6 @@
 # Make double-sure the RAILS_ENV is set to test,
 # so fixtures are loaded to the right database
-silence_warnings { RAILS_ENV = "test" }
+exit("Abort testing: Your Rails environment is not running in test mode!") unless Rails.env.test?
 
 require 'test/unit'
 require 'active_support/core_ext/kernel/requires'