diff --git a/src/lib/core/overlay/position/connected-position-strategy.ts b/src/lib/core/overlay/position/connected-position-strategy.ts
index 4f8ff571587..b111f127993 100644
--- a/src/lib/core/overlay/position/connected-position-strategy.ts
+++ b/src/lib/core/overlay/position/connected-position-strategy.ts
@@ -218,10 +218,10 @@ export class ConnectedPositionStrategy implements PositionStrategy {
       viewportRect: ClientRect): boolean {
 
     // TODO(jelbourn): probably also want some space between overlay edge and viewport edge.
-    return overlayPoint.x >= viewportRect.left &&
-        overlayPoint.x + overlayRect.width <= viewportRect.right &&
-        overlayPoint.y >= viewportRect.top &&
-        overlayPoint.y + overlayRect.height <= viewportRect.bottom;
+    return overlayPoint.x >= 0 &&
+        overlayPoint.x + overlayRect.width <= viewportRect.width &&
+        overlayPoint.y >= 0 &&
+        overlayPoint.y + overlayRect.height <= viewportRect.height;
   }
 
 
diff --git a/src/lib/select/select.spec.ts b/src/lib/select/select.spec.ts
index d93404c6733..ae7302c3490 100644
--- a/src/lib/select/select.spec.ts
+++ b/src/lib/select/select.spec.ts
@@ -745,6 +745,111 @@ describe('MdSelect', () => {
 
     });
 
+    describe('when scrolled', () => {
+
+      // Need to set the scrollTop two different ways to support
+      // both Chrome and Firefox.
+      function setScrollTop(num: number) {
+        document.body.scrollTop = num;
+        document.documentElement.scrollTop = num;
+      }
+
+      beforeEach(() => {
+        // Make the div above the select very tall, so the page will scroll
+        fixture.componentInstance.heightAbove = 2000;
+
+        // Give the select enough horizontal space to open
+        select.style.marginLeft = '20px';
+        select.style.marginRight = '20px';
+      });
+
+      afterEach(() => {
+        document.body.scrollTop = 0;
+        document.documentElement.scrollTop = 0;
+      });
+
+      it('should align the first option properly when scrolled', () => {
+        // Give the select enough space to open
+        fixture.componentInstance.heightBelow = 400;
+        fixture.detectChanges();
+
+        // Scroll the select into view
+        setScrollTop(1700);
+
+        trigger.click();
+        fixture.detectChanges();
+
+        checkTriggerAlignedWithOption(0);
+      });
+
+
+      it('should align a centered option properly when scrolled', () => {
+        // Give the select enough space to open
+        fixture.componentInstance.heightBelow = 400;
+        fixture.detectChanges();
+
+        fixture.componentInstance.control.setValue('chips-4');
+        fixture.detectChanges();
+
+        // Scroll the select into view
+        setScrollTop(1700);
+
+        trigger.click();
+        fixture.detectChanges();
+
+        checkTriggerAlignedWithOption(4);
+      });
+
+      it('should fall back to "above" positioning properly when scrolled', () => {
+        // Give the select insufficient space to open below the trigger
+        fixture.componentInstance.heightBelow = 100;
+        fixture.detectChanges();
+
+        // Scroll the select into view
+        setScrollTop(1400);
+
+        trigger.click();
+        fixture.detectChanges();
+
+        // CSS styles aren't in the tests, so position must be absolute to reflect top/left
+        const overlayPane = overlayContainerElement.children[0] as HTMLElement;
+        overlayPane.style.position = 'absolute';
+
+        const triggerBottom = trigger.getBoundingClientRect().bottom;
+        const overlayBottom = overlayPane.getBoundingClientRect().bottom;
+
+        expect(overlayBottom.toFixed(2))
+            .toEqual(triggerBottom.toFixed(2),
+                `Expected trigger bottom to align with overlay bottom.`);
+      });
+
+      it('should fall back to "below" positioning properly when scrolled', () => {
+        // Give plenty of space for the select to open below the trigger
+        fixture.componentInstance.heightBelow = 650;
+        fixture.detectChanges();
+
+        // Select an option too low in the list to fit in limited space above
+        fixture.componentInstance.control.setValue('sushi-7');
+        fixture.detectChanges();
+
+        // Scroll the select so that it has insufficient space to open above the trigger
+        setScrollTop(1950);
+
+        trigger.click();
+        fixture.detectChanges();
+
+        // CSS styles aren't in the tests, so position must be absolute to reflect top/left
+        const overlayPane = overlayContainerElement.children[0] as HTMLElement;
+        overlayPane.style.position = 'absolute';
+
+        const triggerTop = trigger.getBoundingClientRect().top;
+        const overlayTop = overlayPane.getBoundingClientRect().top;
+
+        expect(overlayTop.toFixed(2))
+            .toEqual(triggerTop.toFixed(2), `Expected trigger top to align with overlay top.`);
+      });
+    });
+
     describe('x-axis positioning', () => {
 
       beforeEach(() => {
@@ -1037,11 +1142,13 @@ describe('MdSelect', () => {
 @Component({
   selector: 'basic-select',
   template: `
+    <div [style.height.px]="heightAbove"></div>
     <md-select placeholder="Food" [formControl]="control" [required]="isRequired">
       <md-option *ngFor="let food of foods" [value]="food.value" [disabled]="food.disabled">
         {{ food.viewValue }}
       </md-option>
     </md-select>
+    <div [style.height.px]="heightBelow"></div>
   `
 })
 class BasicSelect {
@@ -1057,6 +1164,8 @@ class BasicSelect {
   ];
   control = new FormControl();
   isRequired: boolean;
+  heightAbove = 0;
+  heightBelow = 0;
 
   @ViewChild(MdSelect) select: MdSelect;
   @ViewChildren(MdOption) options: QueryList<MdOption>;
diff --git a/src/lib/select/select.ts b/src/lib/select/select.ts
index 520df0bbf05..43455e495c3 100644
--- a/src/lib/select/select.ts
+++ b/src/lib/select/select.ts
@@ -565,10 +565,9 @@ export class MdSelect implements AfterContentInit, ControlValueAccessor, OnDestr
     const viewportRect = this._viewportRuler.getViewportRect();
     const triggerRect = this._getTriggerRect();
 
-    const topSpaceAvailable =
-        triggerRect.top - viewportRect.top - SELECT_PANEL_VIEWPORT_PADDING;
+    const topSpaceAvailable = triggerRect.top - SELECT_PANEL_VIEWPORT_PADDING;
     const bottomSpaceAvailable =
-        viewportRect.bottom - triggerRect.bottom - SELECT_PANEL_VIEWPORT_PADDING;
+        viewportRect.height - triggerRect.bottom - SELECT_PANEL_VIEWPORT_PADDING;
 
     const panelHeightTop = Math.abs(this._offsetY);
     const totalPanelHeight =