diff --git a/modules/angular2/src/core/compiler/directive_metadata.ts b/modules/angular2/src/core/compiler/directive_metadata.ts
index 5024e8ba04d6..ec344771b5d9 100644
--- a/modules/angular2/src/core/compiler/directive_metadata.ts
+++ b/modules/angular2/src/core/compiler/directive_metadata.ts
@@ -64,7 +64,7 @@ export class CompileTemplateMetadata {
     styleUrls?: string[],
     ngContentSelectors?: string[]
   } = {}) {
-    this.encapsulation = encapsulation;
+    this.encapsulation = isPresent(encapsulation) ? encapsulation : ViewEncapsulation.Emulated;
     this.template = template;
     this.templateUrl = templateUrl;
     this.styles = isPresent(styles) ? styles : [];
diff --git a/modules/angular2/src/core/linker/proto_view_factory.ts b/modules/angular2/src/core/linker/proto_view_factory.ts
index 1b62d87f1d87..0caa431199ea 100644
--- a/modules/angular2/src/core/linker/proto_view_factory.ts
+++ b/modules/angular2/src/core/linker/proto_view_factory.ts
@@ -71,7 +71,7 @@ export class ProtoViewFactory {
       var compiledTemplateData = cmd.template.getData(this._appId);
 
       this._renderer.registerComponentTemplate(cmd.templateId, compiledTemplateData.commands,
-                                               compiledTemplateData.styles);
+                                               compiledTemplateData.styles, cmd.nativeShadow);
       var boundPipes = this._flattenPipes(view).map(pipe => this._bindPipe(pipe));
 
       nestedProtoView = new AppProtoView(compiledTemplateData.commands, ViewType.COMPONENT, true,
diff --git a/modules/angular2/src/core/render/api.ts b/modules/angular2/src/core/render/api.ts
index dde8ec21eac3..84c33e1f14d8 100644
--- a/modules/angular2/src/core/render/api.ts
+++ b/modules/angular2/src/core/render/api.ts
@@ -230,7 +230,8 @@ export class Renderer {
    * Once a template is registered it can be referenced via {@link RenderBeginComponentCmd} when
    * {@link #createProtoView creating Render ProtoView}.
    */
-  registerComponentTemplate(templateId: number, commands: RenderTemplateCmd[], styles: string[]) {}
+  registerComponentTemplate(templateId: number, commands: RenderTemplateCmd[], styles: string[],
+                            nativeShadow: boolean) {}
 
   /**
    * Creates a {@link RenderProtoViewRef} from an array of {@link RenderTemplateCmd}`s.
diff --git a/modules/angular2/src/core/render/dom/dom_renderer.ts b/modules/angular2/src/core/render/dom/dom_renderer.ts
index 42b7024a0e93..c26215a8bb1e 100644
--- a/modules/angular2/src/core/render/dom/dom_renderer.ts
+++ b/modules/angular2/src/core/render/dom/dom_renderer.ts
@@ -35,6 +35,7 @@ import {camelCaseToDashCase} from './util';
 @Injectable()
 export class DomRenderer implements Renderer, NodeFactory<Node> {
   private _componentCmds: Map<number, RenderTemplateCmd[]> = new Map<number, RenderTemplateCmd[]>();
+  private _nativeShadowStyles: Map<number, string[]> = new Map<number, string[]>();
   private _document;
 
   /**
@@ -46,9 +47,14 @@ export class DomRenderer implements Renderer, NodeFactory<Node> {
     this._document = document;
   }
 
-  registerComponentTemplate(templateId: number, commands: RenderTemplateCmd[], styles: string[]) {
+  registerComponentTemplate(templateId: number, commands: RenderTemplateCmd[], styles: string[],
+                            nativeShadow: boolean) {
     this._componentCmds.set(templateId, commands);
-    this._domSharedStylesHost.addStyles(styles);
+    if (nativeShadow) {
+      this._nativeShadowStyles.set(templateId, styles);
+    } else {
+      this._domSharedStylesHost.addStyles(styles);
+    }
   }
 
   resolveComponentTemplate(templateId: number): RenderTemplateCmd[] {
@@ -193,7 +199,14 @@ export class DomRenderer implements Renderer, NodeFactory<Node> {
       DOM.setAttribute(node, attrNameAndValues[attrIdx], attrNameAndValues[attrIdx + 1]);
     }
   }
-  createShadowRoot(host: Node): Node { return DOM.createShadowRoot(host); }
+  createShadowRoot(host: Node, templateId: number): Node {
+    var sr = DOM.createShadowRoot(host);
+    var styles = this._nativeShadowStyles.get(templateId);
+    for (var i = 0; i < styles.length; i++) {
+      DOM.appendChild(sr, DOM.createStyleElement(styles[i]));
+    }
+    return sr;
+  }
   createText(value: string): Node { return DOM.createTextNode(isPresent(value) ? value : ''); }
   appendChild(parent: Node, child: Node) { DOM.appendChild(parent, child); }
   on(element: Node, eventName: string, callback: Function) {
diff --git a/modules/angular2/src/core/render/view_factory.ts b/modules/angular2/src/core/render/view_factory.ts
index da3017e9feec..c59048b6a9d4 100644
--- a/modules/angular2/src/core/render/view_factory.ts
+++ b/modules/angular2/src/core/render/view_factory.ts
@@ -70,7 +70,7 @@ export interface NodeFactory<N> {
   createTemplateAnchor(attrNameAndValues: string[]): N;
   createElement(name: string, attrNameAndValues: string[]): N;
   mergeElement(existing: N, attrNameAndValues: string[]);
-  createShadowRoot(host: N): N;
+  createShadowRoot(host: N, templateId: number): N;
   createText(value: string): N;
   appendChild(parent: N, child: N);
   on(element: N, eventName: string, callback: Function);
@@ -125,7 +125,7 @@ class RenderViewBuilder<N> implements RenderCommandVisitor {
     var el = this._beginElement(cmd);
     var root = el;
     if (cmd.nativeShadow) {
-      root = this.factory.createShadowRoot(el);
+      root = this.factory.createShadowRoot(el, cmd.templateId);
       this.nativeShadowRoots.push(root);
     }
     this.parentStack.push(new Component(el, root, cmd, this.factory));
diff --git a/modules/angular2/src/web_workers/ui/renderer.ts b/modules/angular2/src/web_workers/ui/renderer.ts
index 023e81131f7a..7a149cfa382a 100644
--- a/modules/angular2/src/web_workers/ui/renderer.ts
+++ b/modules/angular2/src/web_workers/ui/renderer.ts
@@ -31,7 +31,8 @@ export class MessageBasedRenderer {
     var broker = this._brokerFactory.createMessageBroker(RENDERER_CHANNEL);
     this._bus.initChannel(EVENT_CHANNEL);
 
-    broker.registerMethod("registerComponentTemplate", [PRIMITIVE, WebWorkerTemplateCmd, PRIMITIVE],
+    broker.registerMethod("registerComponentTemplate",
+                          [PRIMITIVE, WebWorkerTemplateCmd, PRIMITIVE, PRIMITIVE],
                           bind(this._renderer.registerComponentTemplate, this._renderer));
     broker.registerMethod("createProtoView", [WebWorkerTemplateCmd, PRIMITIVE],
                           bind(this._createProtoView, this));
diff --git a/modules/angular2/src/web_workers/worker/renderer.ts b/modules/angular2/src/web_workers/worker/renderer.ts
index 9defff4368d5..86a050fc423a 100644
--- a/modules/angular2/src/web_workers/worker/renderer.ts
+++ b/modules/angular2/src/web_workers/worker/renderer.ts
@@ -35,11 +35,13 @@ export class WebWorkerRenderer implements Renderer {
     this._messageBroker = messageBrokerFactory.createMessageBroker(RENDERER_CHANNEL);
   }
 
-  registerComponentTemplate(templateId: number, commands: RenderTemplateCmd[], styles: string[]) {
+  registerComponentTemplate(templateId: number, commands: RenderTemplateCmd[], styles: string[],
+                            nativeShadow: boolean) {
     var fnArgs = [
       new FnArg(templateId, null),
       new FnArg(commands, WebWorkerTemplateCmd),
-      new FnArg(styles, null)
+      new FnArg(styles, null),
+      new FnArg(nativeShadow, null)
     ];
     var args = new UiArguments("registerComponentTemplate", fnArgs);
     this._messageBroker.runOnService(args, null);
diff --git a/modules/angular2/test/core/compiler/directive_metadata_spec.ts b/modules/angular2/test/core/compiler/directive_metadata_spec.ts
index 0a6efc1dee62..76f9149ec7c3 100644
--- a/modules/angular2/test/core/compiler/directive_metadata_spec.ts
+++ b/modules/angular2/test/core/compiler/directive_metadata_spec.ts
@@ -76,6 +76,11 @@ export function main() {
     });
 
     describe('TemplateMetadata', () => {
+      it('should use ViewEncapsulation.Emulated by default', () => {
+        expect(new CompileTemplateMetadata({encapsulation: null}).encapsulation)
+            .toBe(ViewEncapsulation.Emulated);
+      });
+
       it('should serialize with full data', () => {
         expect(CompileTemplateMetadata.fromJson(fullTemplateMeta.toJson()))
             .toEqual(fullTemplateMeta);
diff --git a/modules/angular2/test/core/compiler/template_compiler_spec.ts b/modules/angular2/test/core/compiler/template_compiler_spec.ts
index 9d395afc13db..381376eb5dc4 100644
--- a/modules/angular2/test/core/compiler/template_compiler_spec.ts
+++ b/modules/angular2/test/core/compiler/template_compiler_spec.ts
@@ -26,6 +26,7 @@ import {evalModule} from './eval_module';
 import {SourceModule, moduleRef} from 'angular2/src/core/compiler/source_module';
 import {XHR} from 'angular2/src/core/compiler/xhr';
 import {MockXHR} from 'angular2/src/core/compiler/xhr_mock';
+import {ViewEncapsulation} from 'angular2/src/core/render/api';
 
 import {Locals} from 'angular2/src/core/change_detection/change_detection';
 
@@ -283,22 +284,29 @@ export function main() {
   moduleId: THIS_MODULE_ID,
   exportAs: 'someExportAs'
 })
-@View({template: '<a [href]="someProp"></a>', styles: ['div {color: red}']})
+@View({
+  template: '<a [href]="someProp"></a>',
+  styles: ['div {color: red}'],
+  encapsulation: ViewEncapsulation.None
+})
 class CompWithBindingsAndStyles {
 }
 
 @Component({selector: 'tree', moduleId: THIS_MODULE_ID})
-@View({template: '<tree></tree>', directives: [TreeComp]})
+@View({template: '<tree></tree>', directives: [TreeComp], encapsulation: ViewEncapsulation.None})
 class TreeComp {
 }
 
 @Component({selector: 'comp-url', moduleId: THIS_MODULE_ID})
-@View({templateUrl: 'compUrl.html'})
+@View({templateUrl: 'compUrl.html', encapsulation: ViewEncapsulation.None})
 class CompWithTemplateUrl {
 }
 
 @Component({selector: 'comp-tpl', moduleId: THIS_MODULE_ID})
-@View({template: '<template><a [href]="someProp"></a></template>'})
+@View({
+  template: '<template><a [href]="someProp"></a></template>',
+  encapsulation: ViewEncapsulation.None
+})
 class CompWithEmbeddedTemplate {
 }
 
diff --git a/modules/angular2/test/core/linker/projection_integration_spec.ts b/modules/angular2/test/core/linker/projection_integration_spec.ts
index 9955c589bef7..728d7079f794 100644
--- a/modules/angular2/test/core/linker/projection_integration_spec.ts
+++ b/modules/angular2/test/core/linker/projection_integration_spec.ts
@@ -403,18 +403,18 @@ export function main() {
        }));
 
     if (DOM.supportsNativeShadowDOM()) {
-      it('should support native content projection',
+      it('should support native content projection and isolate styles per component',
          inject([TestComponentBuilder, AsyncTestCompleter], (tcb: TestComponentBuilder, async) => {
            tcb.overrideView(MainComp, new ViewMetadata({
-                              template: '<simple-native>' +
-                                            '<div>A</div>' +
-                                            '</simple-native>',
-                              directives: [SimpleNative]
+                              template: '<simple-native1><div>A</div></simple-native1>' +
+                                            '<simple-native2><div>B</div></simple-native2>',
+                              directives: [SimpleNative1, SimpleNative2]
                             }))
                .createAsync(MainComp)
                .then((main) => {
-
-                 expect(main.debugElement.nativeElement).toHaveText('SIMPLE(A)');
+                 var childNodes = DOM.childNodes(main.debugElement.nativeElement);
+                 expect(childNodes[0]).toHaveText('div {color: red}SIMPLE1(A)');
+                 expect(childNodes[1]).toHaveText('div {color: blue}SIMPLE2(B)');
                  async.done();
                });
          }));
@@ -459,13 +459,24 @@ class Simple {
   stringProp: string = '';
 }
 
-@Component({selector: 'simple-native'})
+@Component({selector: 'simple-native1'})
+@View({
+  template: 'SIMPLE1(<content></content>)',
+  directives: [],
+  encapsulation: ViewEncapsulation.Native,
+  styles: ['div {color: red}']
+})
+class SimpleNative1 {
+}
+
+@Component({selector: 'simple-native2'})
 @View({
-  template: 'SIMPLE(<content></content>)',
+  template: 'SIMPLE2(<content></content>)',
   directives: [],
-  encapsulation: ViewEncapsulation.Native
+  encapsulation: ViewEncapsulation.Native,
+  styles: ['div {color: blue}']
 })
-class SimpleNative {
+class SimpleNative2 {
 }
 
 @Component({selector: 'empty'})
diff --git a/modules/angular2/test/core/render/view_factory_spec.ts b/modules/angular2/test/core/render/view_factory_spec.ts
index 7fbfd0c65801..014bedb95baa 100644
--- a/modules/angular2/test/core/render/view_factory_spec.ts
+++ b/modules/angular2/test/core/render/view_factory_spec.ts
@@ -483,7 +483,7 @@ class DomNodeFactory implements NodeFactory<Node> {
       DOM.setAttribute(el, attrNameAndValues[attrIdx], attrNameAndValues[attrIdx + 1]);
     }
   }
-  createShadowRoot(host: Node): Node {
+  createShadowRoot(host: Node, templateId: number): Node {
     var root = DOM.createElement('shadow-root');
     DOM.appendChild(host, root);
     return root;