diff --git a/railties/lib/initializer.rb b/railties/lib/initializer.rb
index 37bec7a272..b64320225b 100644
--- a/railties/lib/initializer.rb
+++ b/railties/lib/initializer.rb
@@ -4,6 +4,8 @@ require 'rails/version'
 require 'rails/gem_dependency'
 require 'rails/rack'
 
+RAILS_ENV = (ENV['RAILS_ENV'] || 'development').dup unless defined?(RAILS_ENV)
+
 module Rails
   class Configuration
     attr_accessor :cache_classes, :load_paths, :eager_load_paths, :framework_paths,
@@ -13,11 +15,13 @@ module Rails
                   :i18n, :gems
 
     def initialize
+      set_root_path!
+
       @framework_paths         = []
       @load_once_paths         = []
       @after_initialize_blocks = []
-      @plugin_paths            = []
       @loaded_plugins          = []
+      @plugin_paths            = default_plugin_paths
       @frameworks              = default_frameworks
       @plugin_loader           = default_plugin_loader
       @plugin_locators         = default_plugin_locators
@@ -29,6 +33,24 @@ module Rails
       @after_initialize_blocks << blk if blk
     end
 
+    def set_root_path!
+      raise 'RAILS_ROOT is not set' unless defined?(RAILS_ROOT)
+      raise 'RAILS_ROOT is not a directory' unless File.directory?(RAILS_ROOT)
+
+      self.root_path =
+        # Pathname is incompatible with Windows, but Windows doesn't have
+        # real symlinks so File.expand_path is safe.
+        if RUBY_PLATFORM =~ /(:?mswin|mingw)/
+          File.expand_path(RAILS_ROOT)
+
+        # Otherwise use Pathname#realpath which respects symlinks.
+        else
+          Pathname.new(RAILS_ROOT).realpath.to_s
+        end
+
+      RAILS_ROOT.replace self.root_path
+    end
+
     def framework_paths
       paths = %w(railties railties/lib activesupport/lib)
       paths << 'actionpack/lib' if frameworks.include?(:action_controller) || frameworks.include?(:action_view)
@@ -54,6 +76,10 @@ module Rails
       [ :active_record, :action_controller, :action_view, :action_mailer, :active_resource ]
     end
 
+    def default_plugin_paths
+      ["#{root_path}/vendor/plugins"]
+    end
+
     def default_plugin_loader
       require 'rails/plugin/loader'
       Plugin::Loader
diff --git a/railties/test/plugin_locator_test.rb b/railties/test/plugin_locator_test.rb
index 855ac7d82f..da1548dee1 100644
--- a/railties/test/plugin_locator_test.rb
+++ b/railties/test/plugin_locator_test.rb
@@ -27,7 +27,8 @@ class PluginFileSystemLocatorTest < Test::Unit::TestCase
     # We need to add our testing plugin directory to the plugin paths so
     # the locator knows where to look for our plugins
     @configuration.plugin_paths << plugin_fixture_root_path
-    @initializer       = Rails::Initializer.new(@configuration)
+    @initializer       = Rails::Initializer.default
+    @initializer.config = @configuration
     @locator           = Rails::Plugin::FileSystemLocator.new(@initializer)
     @valid_plugin_path = plugin_fixture_path('default/stubby')
     @empty_plugin_path = plugin_fixture_path('default/empty')
diff --git a/railties/test/plugin_test.rb b/railties/test/plugin_test.rb
index a6c390a45a..ae03ea4662 100644
--- a/railties/test/plugin_test.rb
+++ b/railties/test/plugin_test.rb
@@ -2,7 +2,8 @@ require 'plugin_test_helper'
 
 class PluginTest < Test::Unit::TestCase
   def setup
-    @initializer         = Rails::Initializer.new(Rails::Configuration.new)
+    @initializer         = Rails::Initializer.default
+    @initializer.config  = Rails::Configuration.new
     @valid_plugin_path   = plugin_fixture_path('default/stubby')
     @empty_plugin_path   = plugin_fixture_path('default/empty')
     @gemlike_plugin_path = plugin_fixture_path('default/gemlike')
diff --git a/railties/test/rails_generator_test.rb b/railties/test/rails_generator_test.rb
index b2fc2f585d..38bd90dcc1 100644
--- a/railties/test/rails_generator_test.rb
+++ b/railties/test/rails_generator_test.rb
@@ -50,6 +50,9 @@ class RailsGeneratorTest < Test::Unit::TestCase
 
   def setup
     ActiveRecord::Base.pluralize_table_names = true
+    @initializer = Rails::Initializer.default
+    @initializer.config = Rails.configuration
+    @initializer.run(:set_root_path)
   end
 
   def test_sources