diff --git a/app/src/processing/app/Preferences.java b/app/src/processing/app/Preferences.java
index 315620033..4cee5ad8e 100644
--- a/app/src/processing/app/Preferences.java
+++ b/app/src/processing/app/Preferences.java
@@ -121,6 +121,7 @@ public class Preferences {
   JTextField memoryField;
   JCheckBox checkUpdatesBox;
   JTextField fontSizeField;
+  JCheckBox updateExtensionBox;
   JCheckBox autoAssociateBox;
 
 
@@ -325,7 +326,15 @@ public class Preferences {
     checkUpdatesBox.setBounds(left, top, d.width + 10, d.height);
     right = Math.max(right, left + d.width);
     top += d.height + GUI_BETWEEN;
-
+    
+    // [ ] Update sketch files to new extension on save (.pde -> .ino)
+    
+    updateExtensionBox = new JCheckBox("Update sketch files to new extension on save (.pde -> .ino)");
+    pain.add(updateExtensionBox);
+    d = updateExtensionBox.getPreferredSize();
+    updateExtensionBox.setBounds(left, top, d.width + 10, d.height);
+    right = Math.max(right, left + d.width);
+    top += d.height + GUI_BETWEEN;    
 
     // [ ] Automatically associate .pde files with Processing
 
@@ -526,6 +535,8 @@ public class Preferences {
       setBoolean("platform.auto_file_type_associations",
                  autoAssociateBox.isSelected());
     }
+    
+    setBoolean("editor.update_extension", updateExtensionBox.isSelected());
 
     editor.applyPreferences();
   }
@@ -558,6 +569,9 @@ public class Preferences {
       autoAssociateBox.
         setSelected(getBoolean("platform.auto_file_type_associations"));
     }
+    
+    updateExtensionBox.setSelected(get("editor.update_extension") == null ||
+                                   getBoolean("editor.update_extension"));
 
     dialog.setVisible(true);
   }
diff --git a/app/src/processing/app/Sketch.java b/app/src/processing/app/Sketch.java
index edde19c11..4a90795de 100644
--- a/app/src/processing/app/Sketch.java
+++ b/app/src/processing/app/Sketch.java
@@ -718,9 +718,33 @@ public class Sketch {
       });
       
       if (pdeFiles != null && pdeFiles.length > 0) {
-        // Do rename of all .pde files to new .ino extension
-        for (File pdeFile : pdeFiles)
-          renameCodeToInoExtension(pdeFile);
+        if (Preferences.get("editor.update_extension") == null) {
+          Object[] options = { "OK", "Cancel" };
+          int result = JOptionPane.showOptionDialog(editor,
+                                                    "In Arduino 1.0, the default file extension has changed\n" +
+                                                    "from .pde to .ino.  New sketches (including those created\n" +
+                                                    "by \"Save-As\" will use the new extension.  The extension\n" +
+                                                    "of existing sketches will be updated on save, but you can\n" +
+                                                    "disable this in the Preferences dialog.\n" +
+                                                    "\n" +
+                                                    "Save sketch and update its extension?",
+                                                    ".pde -> .ino",
+                                                    JOptionPane.OK_CANCEL_OPTION,
+                                                    JOptionPane.QUESTION_MESSAGE,
+                                                    null,
+                                                    options,
+                                                    options[0]);
+          
+          if (result != JOptionPane.OK_OPTION) return false; // save cancelled
+          
+          Preferences.setBoolean("editor.update_extension", true);
+        }
+        
+        if (Preferences.getBoolean("editor.update_extension")) {
+          // Do rename of all .pde files to new .ino extension
+          for (File pdeFile : pdeFiles)
+            renameCodeToInoExtension(pdeFile);
+        }
       }
     }