diff --git a/lib/fastimage.rb b/lib/fastimage.rb
index aad1bfe..0fbb507 100644
--- a/lib/fastimage.rb
+++ b/lib/fastimage.rb
@@ -237,6 +237,21 @@ class FastImage
         end
       end
 
+      case res['content-encoding']
+      when 'deflate', 'gzip', 'x-gzip'
+        begin
+          gzip = Zlib::GzipReader.new(FiberStream.new(read_fiber))
+        rescue FiberError, Zlib::GzipFile::Error
+          raise CannotParseImage
+        end
+
+        read_fiber = Fiber.new do
+          while data = gzip.readline
+            Fiber.yield data
+          end
+        end
+      end
+      
       parse_packets FiberStream.new(read_fiber)
 
       break  # needed to actively quit out of the fetch
diff --git a/test/fixtures/gzipped.jpg b/test/fixtures/gzipped.jpg
new file mode 100644
index 0000000..8b4337c
Binary files /dev/null and b/test/fixtures/gzipped.jpg differ
diff --git a/test/fixtures/truncated_gzipped.jpg b/test/fixtures/truncated_gzipped.jpg
new file mode 100644
index 0000000..7213325
Binary files /dev/null and b/test/fixtures/truncated_gzipped.jpg differ
diff --git a/test/test.rb b/test/test.rb
index 10194e4..8187b3e 100644
--- a/test/test.rb
+++ b/test/test.rb
@@ -56,6 +56,12 @@ BadFixtures.each do |fn|
   FakeWeb.register_uri(:get, "#{TestUrl}#{fn}", :body => File.join(FixturePath, fn))
 end
 
+GzipTestImg = "gzipped.jpg"
+FakeWeb.register_uri(:get, "#{TestUrl}#{GzipTestImg}", :body => File.join(FixturePath, GzipTestImg), :content_encoding => "gzip") 
+GzipTestImgTruncated = "truncated_gzipped.jpg"
+FakeWeb.register_uri(:get, "#{TestUrl}#{GzipTestImgTruncated}", :body => File.join(FixturePath, GzipTestImgTruncated), :content_encoding => "gzip") 
+GzipTestImgSize = [970, 450]
+
 class FastImageTest < Test::Unit::TestCase
   def test_should_report_type_correctly
     GoodFixtures.each do |fn, info|
@@ -258,4 +264,16 @@ class FastImageTest < Test::Unit::TestCase
       assert_equal info[1], FastImage.size(stringio)
     end
   end
+  
+  def test_gzipped_file
+    url = "http://example.nowhere/#{GzipTestImg}"
+    assert_equal([970, 450], FastImage.size(url))
+  end
+
+  def test_truncated_gzipped_file
+    url = "http://example.nowhere/#{GzipTestImgTruncated}"
+    assert_raises(FastImage::SizeNotFound) do
+      FastImage.size(url, :raise_on_failure => true)
+    end
+  end
 end