diff --git a/compiler/generate/visitors/EachBlock.js b/compiler/generate/visitors/EachBlock.js
index 089ab59876..845105160f 100644
--- a/compiler/generate/visitors/EachBlock.js
+++ b/compiler/generate/visitors/EachBlock.js
@@ -5,8 +5,11 @@ export default {
 	enter ( generator, node ) {
 		const i = generator.counters.each++;
 		const name = `eachBlock_${i}`;
+		const elseName = `${name}_else`;
 		const iterations = `${name}_iterations`;
 		const renderer = `renderEachBlock_${i}`;
+		const renderElse = `${renderer}_else`;
+		const { params } = generator.current;
 
 		const listName = `${name}_value`;
 
@@ -21,12 +24,21 @@ export default {
 		generator.current.initStatements.push( deindent`
 			var ${name}_value = ${snippet};
 			var ${iterations} = [];
+			${node.else ? `var ${elseName} = null;` : ''}
 
 			for ( var i = 0; i < ${name}_value.length; i += 1 ) {
-				${iterations}[i] = ${renderer}( ${generator.current.params}, ${listName}, ${listName}[i], i, component );
+				${iterations}[i] = ${renderer}( ${params}, ${listName}, ${listName}[i], i, component );
 				${!isToplevel ? `${iterations}[i].mount( ${anchor}.parentNode, ${anchor} );` : ''}
 			}
 		` );
+		if ( node.else ) {
+			generator.current.initStatements.push( deindent`
+				if ( !${name}_value.length ) {
+					${elseName} = ${renderElse}( ${params}, component );
+					${!isToplevel ? `${elseName}.mount( ${anchor}.parentNode, ${anchor} );` : ''}
+				}
+			` );
+		}
 
 		if ( isToplevel ) {
 			generator.current.mountStatements.push( deindent`
@@ -34,6 +46,13 @@ export default {
 					${iterations}[i].mount( ${anchor}.parentNode, ${anchor} );
 				}
 			` );
+			if ( node.else ) {
+				generator.current.mountStatements.push( deindent`
+					if ( ${elseName} ) {
+						${elseName}.mount( ${anchor}.parentNode, ${anchor} );
+					}
+				` );
+			}
 		}
 
 		generator.current.updateStatements.push( deindent`
@@ -41,10 +60,10 @@ export default {
 
 			for ( var i = 0; i < ${name}_value.length; i += 1 ) {
 				if ( !${iterations}[i] ) {
-					${iterations}[i] = ${renderer}( ${generator.current.params}, ${listName}, ${listName}[i], i, component );
+					${iterations}[i] = ${renderer}( ${params}, ${listName}, ${listName}[i], i, component );
 					${iterations}[i].mount( ${anchor}.parentNode, ${anchor} );
 				} else {
-					${iterations}[i].update( changed, ${generator.current.params}, ${listName}, ${listName}[i], i );
+					${iterations}[i].update( changed, ${params}, ${listName}, ${listName}[i], i );
 				}
 			}
 
@@ -54,12 +73,51 @@ export default {
 
 			${iterations}.length = ${listName}.length;
 		` );
+		if ( node.else ) {
+			generator.current.updateStatements.push( deindent`
+				if ( !${name}_value.length && ${elseName} ) {
+					${elseName}.update( changed, ${params} );
+				} else if ( !${name}_value.length ) {
+					${elseName} = ${renderElse}( ${params}, component );
+					${elseName}.mount( ${anchor}.parentNode, ${anchor} );
+				} else if ( ${elseName} ) {
+					${elseName}.teardown( true );
+				}
+			` );
+		}
 
 		generator.current.teardownStatements.push( deindent`
 			for ( var i = 0; i < ${iterations}.length; i += 1 ) {
 				${iterations}[i].teardown( ${isToplevel ? 'detach' : 'false'} );
 			}
 		` );
+		if ( node.else ) {
+			generator.current.teardownStatements.push( deindent`
+				if ( ${elseName} ) {
+					${elseName}.teardown( ${isToplevel ? 'detach' : 'false'} );
+				}
+			` );
+		}
+
+		if ( node.else ) {
+			generator.push({
+				useAnchor: false,
+				name: renderElse,
+				target: 'target',
+				localElementDepth: 0,
+
+				initStatements: [],
+				mountStatements: [],
+				updateStatements: [],
+				detachStatements: [],
+				teardownStatements: [],
+
+				counter: counter()
+			});
+			node.else.children.forEach( generator.visit );
+			generator.addRenderer( generator.current );
+			generator.pop();
+		}
 
 		const indexNames = Object.assign( {}, generator.current.indexNames );
 		const indexName = indexNames[ node.context ] = ( node.index || `${node.context}__index` );
@@ -76,7 +134,7 @@ export default {
 		const contextDependencies = Object.assign( {}, generator.current.contextDependencies );
 		contextDependencies[ node.context ] = dependencies;
 
-		const params = generator.current.params + `, ${listName}, ${node.context}, ${indexName}`;
+		const blockParams = generator.current.params + `, ${listName}, ${node.context}, ${indexName}`;
 
 		generator.push({
 			useAnchor: false,
@@ -92,7 +150,7 @@ export default {
 
 			indexNames,
 			listNames,
-			params,
+			params: blockParams,
 
 			initStatements: [],
 			mountStatements: [],
diff --git a/test/compiler/each-block-else/_config.js b/test/compiler/each-block-else/_config.js
new file mode 100644
index 0000000000..313b7fa7e3
--- /dev/null
+++ b/test/compiler/each-block-else/_config.js
@@ -0,0 +1,17 @@
+export default {
+	data: {
+		animals: [ 'alpaca', 'baboon', 'capybara' ],
+		foo: 'something else'
+	},
+	html: 'before\n<p>alpaca</p><p>baboon</p><p>capybara</p>\nafter',
+	test ( assert, component, target ) {
+		component.set({ animals: [] });
+		assert.htmlEqual( target.innerHTML, 'before\n<p>no animals, but rather something else</p>\nafter' );
+
+		component.set({ foo: 'something other' });
+		assert.htmlEqual( target.innerHTML, 'before\n<p>no animals, but rather something other</p>\nafter' );
+		
+		component.set({ animals: ['wombat'] });
+		assert.htmlEqual( target.innerHTML, 'before\n<p>wombat</p>\nafter' );
+	}
+};
diff --git a/test/compiler/each-block-else/main.html b/test/compiler/each-block-else/main.html
new file mode 100644
index 0000000000..6c13e5fb23
--- /dev/null
+++ b/test/compiler/each-block-else/main.html
@@ -0,0 +1,7 @@
+before
+{{#each animals as animal}}
+	<p>{{animal}}</p>
+{{else}}
+	<p>no animals, but rather {{foo}}</p>
+{{/each}}
+after