diff --git a/flask/app.py b/flask/app.py
index a818ae62..fc46a4a3 100644
--- a/flask/app.py
+++ b/flask/app.py
@@ -14,7 +14,7 @@ from threading import Lock
 from datetime import timedelta, datetime
 from itertools import chain
 
-from jinja2 import Environment, PackageLoader, FileSystemLoader
+from jinja2 import Environment, BaseLoader, FileSystemLoader, TemplateNotFound
 from werkzeug import ImmutableDict, create_environ
 from werkzeug.routing import Map, Rule
 from werkzeug.exceptions import HTTPException, InternalServerError, NotFound
@@ -32,13 +32,38 @@ from flask.module import _ModuleSetupState
 _logger_lock = Lock()
 
 
-def _select_autoescape(filename):
-    """Returns `True` if autoescaping should be active for the given
-    template name.
+class _DispatchingJinjaLoader(BaseLoader):
+    """A loader that looks for templates in the application and all
+    the module folders.
     """
-    if filename is None:
-        return False
-    return filename.endswith(('.html', '.htm', '.xml', '.xhtml'))
+
+    def __init__(self, app):
+        self.app = app
+
+    def get_source(self, environment, template):
+        name = template
+        loader = None
+        try:
+            module, name = template.split('/', 1)
+            loader = self.app.modules[module].jinja_loader
+        except (ValueError, KeyError):
+            pass
+        if loader is None:
+            loader = self.app.jinja_loader
+        try:
+            return loader.get_source(environment, name)
+        except TemplateNotFound:
+            # re-raise the exception with the correct fileame here.
+            # (the one that includes the prefix)
+            raise TemplateNotFound(template)
+
+    def list_templates(self):
+        result = self.app.jinja_loader.list_templates()
+        for name, module in self.app.modules.iteritems():
+            if module.jinja_loader is not None:
+                for template in module.jinja_loader.list_templates():
+                    result.append('%s/%s' % (name, template))
+        return result
 
 
 class Flask(_PackageBoundObject):
@@ -176,7 +201,6 @@ class Flask(_PackageBoundObject):
 
     #: Options that are passed directly to the Jinja2 environment.
     jinja_options = ImmutableDict(
-        autoescape=_select_autoescape,
         extensions=['jinja2.ext.autoescape', 'jinja2.ext.with_']
     )
 
@@ -245,6 +269,11 @@ class Flask(_PackageBoundObject):
             None: [_default_template_ctx_processor]
         }
 
+        #: all the loaded modules in a dictionary by name.
+        #:
+        #: .. versionadded:: 0.5
+        self.modules = {}
+
         #: The :class:`~werkzeug.routing.Map` for this instance.  You can use
         #: this to change the routing converters after the class was created
         #: but before any routes are connected.  Example::
@@ -269,8 +298,7 @@ class Flask(_PackageBoundObject):
                               view_func=self.send_static_file)
 
         #: The Jinja2 environment.  It is created from the
-        #: :attr:`jinja_options` and the loader that is returned
-        #: by the :meth:`create_jinja_loader` function.
+        #: :attr:`jinja_options`.
         self.jinja_env = self.create_jinja_environment()
         self.init_jinja_globals()
 
@@ -315,16 +343,10 @@ class Flask(_PackageBoundObject):
 
         .. versionadded:: 0.5
         """
-        return Environment(loader=self.create_jinja_loader(),
-                           **self.jinja_options)
-
-    def create_jinja_loader(self):
-        """Creates the Jinja loader.  By default just a package loader for
-        the configured package is returned that looks up templates in the
-        `templates` folder.  To add other loaders it's possible to
-        override this method.
-        """
-        return FileSystemLoader(os.path.join(self.root_path, 'templates'))
+        options = dict(self.jinja_options)
+        if 'autoescape' not in options:
+            options['autoescape'] = self.select_jinja_autoescape
+        return Environment(loader=_DispatchingJinjaLoader(self), **options)
 
     def init_jinja_globals(self):
         """Called directly after the environment was created to inject
@@ -339,6 +361,16 @@ class Flask(_PackageBoundObject):
         )
         self.jinja_env.filters['tojson'] = _tojson_filter
 
+    def select_jinja_autoescape(self, filename):
+        """Returns `True` if autoescaping should be active for the given
+        template name.
+
+        .. versionadded:: 0.5
+        """
+        if filename is None:
+            return False
+        return filename.endswith(('.html', '.htm', '.xml', '.xhtml'))
+
     def update_template_context(self, context):
         """Update the template context with some commonly used variables.
         This injects request, session and g into the template context.
diff --git a/flask/helpers.py b/flask/helpers.py
index 518d953f..d0b3ac23 100644
--- a/flask/helpers.py
+++ b/flask/helpers.py
@@ -27,7 +27,9 @@ except ImportError:
     except ImportError:
         json_available = False
 
-from werkzeug import Headers, wrap_file, is_resource_modified
+from werkzeug import Headers, wrap_file, is_resource_modified, cached_property
+
+from jinja2 import FileSystemLoader
 
 from flask.globals import session, _request_ctx_stack, current_app, request
 from flask.wrappers import Response
@@ -340,6 +342,16 @@ class _PackageBoundObject(object):
         """
         return os.path.isdir(os.path.join(self.root_path, 'static'))
 
+    @cached_property
+    def jinja_loader(self):
+        """The Jinja loader for this package bound object.
+
+        .. versionadded:: 0.5
+        """
+        template_folder = os.path.join(self.root_path, 'templates')
+        if os.path.isdir(template_folder):
+            return FileSystemLoader(template_folder)
+
     def send_static_file(self, filename):
         """Function used internally to send static files from the static
         folder to the browser.
diff --git a/flask/module.py b/flask/module.py
index cc904d20..ee1a342e 100644
--- a/flask/module.py
+++ b/flask/module.py
@@ -12,12 +12,14 @@
 from flask.helpers import _PackageBoundObject
 
 
-def _register_module_static(module):
+def _register_module(module):
     """Internal helper function that returns a function for recording
     that registers the `send_static_file` function for the module on
-    the application of necessary.
+    the application of necessary.  It also registers the module on
+    the application.
     """
-    def _register_static(state):
+    def _register(state):
+        state.app.modules[module.name] = module
         # do not register the rule if the static folder of the
         # module is the same as the one from the application.
         if state.app.root_path == module.root_path:
@@ -30,7 +32,7 @@ def _register_module_static(module):
         state.app.add_url_rule(path + '/<filename>',
                                '%s.static' % module.name,
                                view_func=module.send_static_file)
-    return _register_static
+    return _register
 
 
 class _ModuleSetupState(object):
@@ -97,11 +99,7 @@ class Module(_PackageBoundObject):
         _PackageBoundObject.__init__(self, import_name)
         self.name = name
         self.url_prefix = url_prefix
-        self._register_events = []
-
-        # if there is a static folder, register it for this module
-        if self.has_static_folder:
-            self._record(_register_module_static(self))
+        self._register_events = [_register_module(self)]
 
     def route(self, rule, **options):
         """Like :meth:`Flask.route` but for a module.  The endpoint for the