diff --git a/bin/middleman b/bin/middleman
index 39b302b4..eeb87b00 100755
--- a/bin/middleman
+++ b/bin/middleman
@@ -1,8 +1,60 @@
 #!/usr/bin/env ruby
-require "rubygems"
 
 libdir = File.join(File.dirname(File.dirname(__FILE__)), "lib")
 $LOAD_PATH.unshift(libdir) unless $LOAD_PATH.include?(libdir)
 
-require 'middleman'
-Middleman::CLI.start
\ No newline at end of file
+require 'pathname'
+require 'rubygems'
+
+module Middleman
+  module ProjectLocator
+    def self.locate_middleman_root!
+      cwd = Dir.pwd
+      
+      if !in_middleman_project? && !in_middleman_project_subdirectory?
+        $stderr.puts "== Error: Could not find a Middleman project config, perhaps you are in the wrong folder?"
+        return
+      end
+      
+      if in_middleman_project?
+        did_locate_middleman_project(cwd)
+      end
+      
+      Dir.chdir("..") do
+        # Recurse in a chdir block: if the search fails we want to be sure
+        # the application is generated in the original working directory.
+        locate_middleman_root! unless cwd == Dir.pwd
+      end
+    rescue SystemCallError
+      # could not chdir, no problem just return
+    end
+
+    def self.in_middleman_project?
+      File.exists?('config.rb')
+    end
+
+    def self.in_middleman_project_subdirectory?(path = Pathname.new(Dir.pwd))
+      File.exists?(File.join(path, 'config.rb')) || !path.root? && in_middleman_project_subdirectory?(path.parent)
+    end
+    
+    def self.did_locate_middleman_project(path)
+      # Set up gems listed in the Gemfile.
+      ENV['BUNDLE_GEMFILE'] ||= File.expand_path('Gemfile', path)
+
+      require 'bundler/setup' if File.exists?(ENV['BUNDLE_GEMFILE'])
+
+      start_cli!
+    end
+    
+    def self.start_cli!
+      require 'middleman'
+      Middleman::CLI.start
+    end
+  end
+end
+
+if ARGV.length < 1 || %w(server build migrate).include?(ARGV.first)
+  Middleman::ProjectLocator.locate_middleman_root!
+else
+  Middleman::ProjectLocator.start_cli!
+end
\ No newline at end of file
diff --git a/lib/middleman/cli.rb b/lib/middleman/cli.rb
index 363e2918..c2840276 100644
--- a/lib/middleman/cli.rb
+++ b/lib/middleman/cli.rb
@@ -34,7 +34,7 @@ module Middleman
     method_option "livereload", :default => false, :type => :boolean, :desc => "Whether to enable Livereload or not"
     method_option "livereload-port", :default => "35729", :desc => "The port Livereload will listen on"
     def server
-      config_check && v1_check
+      v1_check
       if options["livereload"]
         livereload_options = {:port => options["livereload-port"]}
       end
@@ -48,13 +48,12 @@ module Middleman
     desc "build", "Builds the static site for deployment"
     method_option "relative", :type => :boolean, :aliases => "-r", :default => false, :desc => 'Override the config.rb file and force relative urls'
     def build
-      config_check && v1_check
+      v1_check
       thor_group = Middleman::Builder.new([], options).invoke_all
     end
 
     desc "migrate", "Migrates an older Middleman project to the 2.0 structure"
     def migrate
-      config_check
       return if File.exists?("source")
       `mv public source`
       `cp -R views/* source/`
@@ -68,17 +67,10 @@ module Middleman
     end
     
   private
-
-    def config_check
-      if !File.exists?("config.rb")
-        $stderr.puts "== Error: Could not find a Middleman project config, perhaps you are in the wrong folder?"
-        exit 1
-      end
-    end
     
     def v1_check
       if File.exists?("views") || File.exists?("public")
-        $stderr.puts "== Error: The views and public folders are have been combined. Create a new 'source' folder, add the contents of views and public to it and then remove the empty views and public folders."
+        $stderr.puts "== Error: The views and public folders are have been combined. Use the 'middleman migrate' command to merge your folders automatically."
         exit 1
       end
     end