diff --git a/app/controllers/milestones_controller.rb b/app/controllers/milestones_controller.rb
index a0c824e8..57f1e9e6 100644
--- a/app/controllers/milestones_controller.rb
+++ b/app/controllers/milestones_controller.rb
@@ -12,7 +12,7 @@ class MilestonesController < ProjectResourceController
 
   def index
     @milestones = case params[:f]
-                  when 'all'; @project.milestones.order("closed, due_date DESC")
+                  when 'all'; @project.milestones.order("state, due_date DESC")
                   when 'closed'; @project.milestones.closed.order("due_date DESC")
                   else @project.milestones.active.order("due_date ASC")
                   end
diff --git a/app/models/milestone.rb b/app/models/milestone.rb
index 457fe18f..23b41446 100644
--- a/app/models/milestone.rb
+++ b/app/models/milestone.rb
@@ -13,19 +13,32 @@
 #
 
 class Milestone < ActiveRecord::Base
-  attr_accessible :title, :description, :due_date, :closed, :author_id_of_changes
+  attr_accessible :title, :description, :due_date, :state_event, :author_id_of_changes
   attr_accessor :author_id_of_changes
 
   belongs_to :project
   has_many :issues
   has_many :merge_requests
 
-  scope :active, -> { where(closed: false) }
-  scope :closed, -> { where(closed: true) }
+  scope :active, -> { with_state(:active) }
+  scope :closed, -> { with_state(:closed) }
 
   validates :title, presence: true
   validates :project, presence: true
-  validates :closed, inclusion: { in: [true, false] }
+
+  state_machine :state, :initial => :active do
+    event :close do
+      transition :active => :closed
+    end
+
+    event :activate do
+      transition :closed => :active
+    end
+
+    state :closed
+
+    state :active
+  end
 
   def expired?
     if due_date
@@ -68,17 +81,13 @@ class Milestone < ActiveRecord::Base
   end
 
   def can_be_closed?
-    open? && issues.opened.count.zero?
+    active? && issues.opened.count.zero?
   end
 
   def is_empty?
     total_items_count.zero?
   end
 
-  def open?
-    !closed
-  end
-
   def author_id
     author_id_of_changes
   end
diff --git a/app/views/milestones/_milestone.html.haml b/app/views/milestones/_milestone.html.haml
index 00e20117..d48d842a 100644
--- a/app/views/milestones/_milestone.html.haml
+++ b/app/views/milestones/_milestone.html.haml
@@ -1,6 +1,6 @@
-%li{class: "milestone milestone-#{milestone.closed ? 'closed' : 'open'}", id: dom_id(milestone) }
+%li{class: "milestone milestone-#{milestone.closed? ? 'closed' : 'open'}", id: dom_id(milestone) }
   .pull-right
-    - if can?(current_user, :admin_milestone, milestone.project) and milestone.open?
+    - if can?(current_user, :admin_milestone, milestone.project) and milestone.opened?
       = link_to edit_project_milestone_path(milestone.project, milestone), class: "btn btn-small edit-milestone-link grouped" do
         %i.icon-edit
         Edit
diff --git a/app/views/milestones/show.html.haml b/app/views/milestones/show.html.haml
index 3133c201..f8ed8518 100644
--- a/app/views/milestones/show.html.haml
+++ b/app/views/milestones/show.html.haml
@@ -9,7 +9,7 @@
         &larr; To milestones list
   .span6
     .pull-right
-      - unless  @milestone.closed
+      - unless  @milestone.closed?
         = link_to new_project_issue_path(@project, issue: { milestone_id: @milestone.id }), class: "btn btn-small grouped", title: "New Issue" do
           %i.icon-plus
           New Issue
@@ -25,12 +25,12 @@
   %hr
   %p
     %span All issues for this milestone are closed. You may close milestone now.
-    = link_to 'Close Milestone', project_milestone_path(@project, @milestone, milestone: {closed: true }), method: :put, class: "btn btn-small btn-remove"
+    = link_to 'Close Milestone', project_milestone_path(@project, @milestone, milestone: {state: :closed }), method: :put, class: "btn btn-small btn-remove"
 
 .ui-box.ui-box-show
   .ui-box-head
     %h4.box-title
-      - if @milestone.closed
+      - if @milestone.closed?
         .error.status_info Closed
       - elsif @milestone.expired?
         .error.status_info Expired
@@ -63,7 +63,7 @@
           %li=link_to('All Issues', '#')
       %ul.well-list
         - @issues.each do |issue|
-          %li{data: {closed: issue.closed}}
+          %li{data: {closed: issue.closed?}}
             = link_to [@project, issue] do
               %span.badge.badge-info ##{issue.id}
             &ndash;
diff --git a/lib/api/milestones.rb b/lib/api/milestones.rb
index 6aca9d01..eaf0d37c 100644
--- a/lib/api/milestones.rb
+++ b/lib/api/milestones.rb
@@ -59,14 +59,14 @@ module Gitlab
       #   title (optional) - The title of a milestone
       #   description (optional) - The description of a milestone
       #   due_date (optional) - The due date of a milestone
-      #   closed (optional) - The status of the milestone
+      #   state (optional) - The status of the milestone (close|activate)
       # Example Request:
       #   PUT /projects/:id/milestones/:milestone_id
       put ":id/milestones/:milestone_id" do
         authorize! :admin_milestone, user_project
 
         @milestone = user_project.milestones.find(params[:milestone_id])
-        attrs = attributes_for_keys [:title, :description, :due_date, :closed]
+        attrs = attributes_for_keys [:title, :description, :due_date, :state_event]
         if @milestone.update_attributes attrs
           present @milestone, with: Entities::Milestone
         else
diff --git a/spec/models/milestone_spec.rb b/spec/models/milestone_spec.rb
index 8871bf4a..cdf0715a 100644
--- a/spec/models/milestone_spec.rb
+++ b/spec/models/milestone_spec.rb
@@ -27,7 +27,6 @@ describe Milestone do
   describe "Validation" do
     it { should validate_presence_of(:title) }
     it { should validate_presence_of(:project) }
-    it { should ensure_inclusion_of(:closed).in_array([true, false]) }
   end
 
   let(:milestone) { create(:milestone) }
@@ -41,7 +40,7 @@ describe Milestone do
 
     it "should count closed issues" do
       IssueObserver.current_user = issue.author
-      issue.update_attributes(closed: true)
+      issue.close
       milestone.issues << issue
       milestone.percent_complete.should == 100
     end
@@ -96,7 +95,7 @@ describe Milestone do
   describe :items_count do
     before do
       milestone.issues << create(:issue)
-      milestone.issues << create(:issue, closed: true)
+      milestone.issues << create(:closed_issue)
       milestone.merge_requests << create(:merge_request)
     end
 
@@ -109,8 +108,4 @@ describe Milestone do
   describe :can_be_closed? do
     it { milestone.can_be_closed?.should be_true }
   end
-
-  describe :open? do
-    it { milestone.open?.should be_true }
-  end
 end
diff --git a/spec/requests/api/milestones_spec.rb b/spec/requests/api/milestones_spec.rb
index 80696671..d1b5e449 100644
--- a/spec/requests/api/milestones_spec.rb
+++ b/spec/requests/api/milestones_spec.rb
@@ -44,4 +44,14 @@ describe Gitlab::API do
       json_response['title'].should == 'updated title'
     end
   end
+
+  describe "PUT /projects/:id/milestones/:milestone_id to close milestone" do
+    it "should update a project milestone" do
+      put api("/projects/#{project.id}/milestones/#{milestone.id}", user),
+        state_event: 'close'
+      response.status.should == 200
+
+      json_response['state'].should == 'closed'
+    end
+  end
 end