diff --git a/examples/guestbook/guestbook.yaml b/examples/guestbook/guestbook.yaml
index 9a31d2489..073f01994 100644
--- a/examples/guestbook/guestbook.yaml
+++ b/examples/guestbook/guestbook.yaml
@@ -7,6 +7,9 @@ resources:
     external_service: true
     replicas: 3
     image: gcr.io/google_containers/example-guestbook-php-redis:v3
+    env:
+    - name: redis-master
+      value: $(ref.redis-master.name)
 - name: redis
   type: github.com/kubernetes/application-dm-templates/storage/redis:v1
   properties: null
diff --git a/manager/manager/manager.go b/manager/manager/manager.go
index 4c2f2f486..a8aa08a7e 100644
--- a/manager/manager/manager.go
+++ b/manager/manager/manager.go
@@ -206,6 +206,11 @@ func (m *manager) DeleteDeployment(name string, forget bool) (*common.Deployment
 
 	if latest != nil {
 		log.Printf("Deleting resources from the latest manifest")
+		// Clear previous state.
+		for _, r := range latest.ExpandedConfig.Resources {
+			r.State = nil
+		}
+
 		if _, err := m.deployer.DeleteConfiguration(latest.ExpandedConfig); err != nil {
 			log.Printf("Failed to delete resources from the latest manifest: %v", err)
 			return nil, err
diff --git a/resourcifier/configurator/configurator.go b/resourcifier/configurator/configurator.go
index c6c72d272..fb826f86a 100644
--- a/resourcifier/configurator/configurator.go
+++ b/resourcifier/configurator/configurator.go
@@ -18,10 +18,11 @@ import (
 	"fmt"
 	"log"
 	"os/exec"
+	"regexp"
 	"strings"
 
-	"github.com/kubernetes/deployment-manager/common"
 	"github.com/ghodss/yaml"
+	"github.com/kubernetes/deployment-manager/common"
 )
 
 // TODO(jackgr): Define an interface and a struct type for Configurator and move initialization to the caller.
@@ -73,83 +74,188 @@ func (e *Error) appendError(err error) error {
 	return err
 }
 
+// resource name -> set of dependencies.
+type DependencyMap map[string]map[string]bool
+
+var refRe = regexp.MustCompile("\\$\\(ref\\.([^\\.]+)\\.([^\\)]+)\\)")
+
 // Configure passes each resource in the configuration to kubectl and performs the appropriate
 // action on it (create/delete/replace) and updates the State of the resource with the resulting
-// status. In case of errors with a resource, Resource.State.Errors is set. 
+// status. In case of errors with a resource, Resource.State.Errors is set.
 // and then updates the deployment with the completion status and completion time.
 func (a *Configurator) Configure(c *common.Configuration, o operation) (string, error) {
 	errors := &Error{}
 	var output []string
-	for i, resource := range c.Resources {
-		args := []string{o.String()}
-		if o == GetOperation {
-			args = append(args, "-o", "yaml")
-			if resource.Type != "" {
-				args = append(args, resource.Type)
-				if resource.Name != "" {
-					args = append(args, resource.Name)
-				}
-			}
+
+	deps, err := getDependencies(c, o)
+	if err != nil {
+		e := fmt.Errorf("Error generating dependencies: %s", err.Error())
+		return "", e
+	}
+
+	for {
+		resources := getUnprocessedResources(c)
+
+		// No more resources to process.
+		if len(resources) == 0 {
+			break
 		}
 
-		var y []byte
-		if len(resource.Properties) > 0 {
-			var err error
-			y, err = yaml.Marshal(resource.Properties)
-			if err != nil {
-				e := fmt.Errorf("yaml marshal failed for resource: %v: %v", resource.Name, err)
-				log.Println(errors.appendError(e))
-				c.Resources[i].State = &common.ResourceState{
-					Status: common.Aborted,
-					Errors: []string{e.Error()},
-				}
+		for _, r := range resources {
+			// Resource still has dependencies.
+			if len(deps[r.Name]) != 0 {
 				continue
 			}
+
+			out, err := a.configureResource(r, o)
+			if err != nil {
+				log.Println(errors.appendError(err))
+				abortDependants(c, deps, r.Name)
+
+				// Resource states have changed, need to recalculate unprocessed
+				// resources.
+				break
+			}
+
+			output = append(output, out)
+			removeDependencies(deps, r.Name)
 		}
+	}
+
+	return strings.Join(output, "\n"), nil
+}
+
+func (a *Configurator) configureResource(resource *common.Resource, o operation) (string, error) {
+	args := []string{o.String()}
+	if o == GetOperation {
+		args = append(args, "-o", "yaml")
+		if resource.Type != "" {
+			args = append(args, resource.Type)
+			if resource.Name != "" {
+				args = append(args, resource.Name)
+			}
+		}
+	}
 
-		if len(y) > 0 {
-			args = append(args, "-f", "-")
+	var y []byte
+	if len(resource.Properties) > 0 {
+		var err error
+		y, err = yaml.Marshal(resource.Properties)
+		if err != nil {
+			e := fmt.Errorf("yaml marshal failed for resource: %v: %v", resource.Name, err)
+			resource.State = failState(e)
+			return "", e
 		}
+	}
 
-		args = append(args, a.Arguments...)
-		cmd := exec.Command(a.KubePath, args...)
-		cmd.Stdin = bytes.NewBuffer(y)
+	if len(y) > 0 {
+		args = append(args, "-f", "-")
+	}
 
-		// Combine stdout and stderr into a single dynamically resized buffer
-		combined := &bytes.Buffer{}
-		cmd.Stdout = combined
-		cmd.Stderr = combined
+	args = append(args, a.Arguments...)
+	cmd := exec.Command(a.KubePath, args...)
+	cmd.Stdin = bytes.NewBuffer(y)
 
-		if err := cmd.Start(); err != nil {
-			e := fmt.Errorf("cannot start kubetcl for resource: %v: %v", resource.Name, err)
-			c.Resources[i].State = &common.ResourceState{
-				Status: common.Failed,
-				Errors: []string{e.Error()},
-			}
-			log.Println(errors.appendError(e))
-			continue
+	// Combine stdout and stderr into a single dynamically resized buffer
+	combined := &bytes.Buffer{}
+	cmd.Stdout = combined
+	cmd.Stderr = combined
+
+	if err := cmd.Start(); err != nil {
+		e := fmt.Errorf("cannot start kubetcl for resource: %v: %v", resource.Name, err)
+		resource.State = failState(e)
+		return "", e
+	}
+
+	if err := cmd.Wait(); err != nil {
+		// Treat delete special. If a delete is issued and a resource is not found, treat it as
+		// success.
+		if o == DeleteOperation && strings.HasSuffix(strings.TrimSpace(combined.String()), "not found") {
+			log.Println(resource.Name + " not found, treating as success for delete")
+		} else {
+			e := fmt.Errorf("kubetcl failed for resource: %v: %v: %v", resource.Name, err, combined.String())
+			resource.State = failState(e)
+			return "", e
+		}
+	}
+
+	log.Printf("kubectl succeeded for resource: %v: SysTime: %v UserTime: %v\n%v",
+		resource.Name, cmd.ProcessState.SystemTime(), cmd.ProcessState.UserTime(), combined.String())
+
+	resource.State = &common.ResourceState{Status: common.Created}
+	return combined.String(), nil
+}
+
+func failState(e error) *common.ResourceState {
+	return &common.ResourceState{
+		Status: common.Failed,
+		Errors: []string{e.Error()},
+	}
+}
+
+func getUnprocessedResources(c *common.Configuration) []*common.Resource {
+	var resources []*common.Resource
+	for _, r := range c.Resources {
+		if r.State == nil {
+			resources = append(resources, r)
+		}
+	}
+
+	return resources
+}
+
+// getDependencies iterates over resources and returns a map of resource name to
+// the set of dependencies that resource has.
+//
+// Dependencies are reversed for delete operation.
+func getDependencies(c *common.Configuration, o operation) (DependencyMap, error) {
+	deps := DependencyMap{}
+
+	// Prepopulate map. This will be used later to validate referenced resources
+	// actually exist.
+	for _, r := range c.Resources {
+		deps[r.Name] = make(map[string]bool)
+	}
+
+	for _, r := range c.Resources {
+		props, err := yaml.Marshal(r.Properties)
+		if err != nil {
+			return nil, fmt.Errorf("Failed to deserialize resource properties for resource %s: %v", r.Name, r.Properties)
 		}
 
-		if err := cmd.Wait(); err != nil {
-			// Treat delete special. If a delete is issued and a resource is not found, treat it as
-			// success.
-			if (o == DeleteOperation && strings.HasSuffix(strings.TrimSpace(combined.String()), "not found")) {
-				log.Println(resource.Name + " not found, treating as success for delete")
+		refs := refRe.FindAllStringSubmatch(string(props), -1)
+		for _, ref := range refs {
+			// Validate referenced resource exists in config.
+			if _, ok := deps[ref[1]]; !ok {
+				return nil, fmt.Errorf("Invalid resource name in reference: %s", ref[1])
+			}
+
+			// Delete dependencies should be reverse of create.
+			if o == DeleteOperation {
+				deps[ref[1]][r.Name] = true
 			} else {
-				e := fmt.Errorf("kubetcl failed for resource: %v: %v: %v", resource.Name, err, combined.String())
-				c.Resources[i].State = &common.ResourceState{
-					Status: common.Failed,
-					Errors: []string{e.Error()},
-				}
-				log.Println(errors.appendError(e))
-				continue
+				deps[r.Name][ref[1]] = true
 			}
 		}
+	}
 
-		output = append(output, combined.String())
-		c.Resources[i].State = &common.ResourceState{Status: common.Created}
-		log.Printf("kubectl succeeded for resource: %v: SysTime: %v UserTime: %v\n%v",
-			resource.Name, cmd.ProcessState.SystemTime(), cmd.ProcessState.UserTime(), combined.String())
+	return deps, nil
+}
+
+// updateDependants removes the dependency dep from the set of dependencies for
+// all resource.
+func removeDependencies(deps DependencyMap, dep string) {
+	for _, d := range deps {
+		delete(d, dep)
+	}
+}
+
+// abortDependants changes the state of all of the dependants of a resource to
+// Aborted.
+func abortDependants(c *common.Configuration, deps DependencyMap, dep string) {
+	for _, r := range c.Resources {
+		if _, ok := deps[r.Name][dep]; ok {
+			r.State = &common.ResourceState{Status: common.Aborted}
+		}
 	}
-	return strings.Join(output, "\n"), nil
 }