diff --git a/docs/docs/basic-usage.md b/docs/docs/basic-usage.md
index 86887943377..19a724b69b3 100644
--- a/docs/docs/basic-usage.md
+++ b/docs/docs/basic-usage.md
@@ -16,7 +16,7 @@ This will create the `poetry-demo` directory with the following content:
 ```text
 poetry-demo
 ├── pyproject.toml
-├── README.rst
+├── README.md
 ├── poetry_demo
 │   └── __init__.py
 └── tests
diff --git a/docs/docs/cli.md b/docs/docs/cli.md
index 1a142216924..437df068fa6 100644
--- a/docs/docs/cli.md
+++ b/docs/docs/cli.md
@@ -39,7 +39,7 @@ will create a folder as follows:
 ```text
 my-package
 ├── pyproject.toml
-├── README.rst
+├── README.md
 ├── my_package
 │   └── __init__.py
 └── tests
@@ -65,7 +65,7 @@ That will create a folder structure as follows:
 ```text
 my-package
 ├── pyproject.toml
-├── README.rst
+├── README.md
 ├── src
 │   └── my_package
 │       └── __init__.py
diff --git a/poetry/console/commands/init.py b/poetry/console/commands/init.py
index 93dfc610db6..79195de3f50 100644
--- a/poetry/console/commands/init.py
+++ b/poetry/console/commands/init.py
@@ -17,6 +17,7 @@ class InitCommand(Command):
     init
         {--name= : Name of the package}
         {--description= : Description of the package}
+        {--readme= : Readme file of the package}
         {--author= : Author name of the package}
         {--dependency=* : Package to require with an optional version constraint,
                           e.g. requests:^2.10.0 or requests=2.11.1}
@@ -76,6 +77,12 @@ def handle(self):
         )
         description = self.ask(question)
 
+        readme = self.option("readme") or ""
+        question = self.create_question(
+            "Readme [<comment>{}</comment>]: ".format(readme), default=readme
+        )
+        readme = self.ask(question)
+
         author = self.option("author")
         if not author and vcs_config and vcs_config.get("user.name"):
             author = vcs_config["user.name"]
@@ -141,6 +148,7 @@ def handle(self):
             name,
             version,
             description=description,
+            readme=readme,
             author=authors[0] if authors else None,
             license=license,
             python=python,
diff --git a/poetry/console/commands/new.py b/poetry/console/commands/new.py
index c0ceb352726..fc6666a9e8d 100644
--- a/poetry/console/commands/new.py
+++ b/poetry/console/commands/new.py
@@ -35,7 +35,7 @@ def handle(self):
                     "exists and is not empty".format(path)
                 )
 
-        readme_format = "rst"
+        readme_format = "md"
 
         config = GitConfig()
         author = None
diff --git a/poetry/layouts/layout.py b/poetry/layouts/layout.py
index e46ade211ad..94e4612efd6 100644
--- a/poetry/layouts/layout.py
+++ b/poetry/layouts/layout.py
@@ -48,6 +48,7 @@ def __init__(
         project,
         version="0.1.0",
         description="",
+        readme=None,
         readme_format="md",
         author=None,
         license=None,
@@ -59,6 +60,7 @@ def __init__(
         self._package_name = module_name(project)
         self._version = version
         self._description = description
+        self._readme = readme
         self._readme_format = readme_format
         self._license = license
         self._python = python
@@ -73,11 +75,11 @@ def __init__(
 
         self._author = author
 
-    def create(self, path, with_tests=True):
+    def create(self, path, with_tests=True, readme_format="md"):
         path.mkdir(parents=True, exist_ok=True)
 
         self._create_default(path)
-        self._create_readme(path)
+        self._create_readme(path, readme_format)
 
         if with_tests:
             self._create_tests(path)
@@ -94,6 +96,10 @@ def generate_poetry_content(self):
         poetry_content["name"] = self._project
         poetry_content["version"] = self._version
         poetry_content["description"] = self._description
+
+        if self._readme:
+            poetry_content["readme"] = self._readme
+
         poetry_content["authors"].append(self._author)
         if self._license:
             poetry_content["license"] = self._license
@@ -122,13 +128,18 @@ def generate_poetry_content(self):
     def _create_default(self, path, src=True):
         raise NotImplementedError()
 
-    def _create_readme(self, path):
-        if self._readme_format == "rst":
-            readme_file = path / "README.rst"
-        else:
-            readme_file = path / "README.md"
+    def _create_readme(self, path, readme_format):
+        readme_file = path / "README.{}".format(self._readme_format)
+
+        with open(readme_file, "w") as f:
+            if readme_format == "md":
+                f.write("# {}".format(self._project))
+            elif readme_format == "rst":
+                f.write("=" * len(self._project))
+                f.write("# {}".format(self._project))
+                f.write("=" * len(self._project))
 
-        readme_file.touch()
+        self._readme = readme_file
 
     def _create_tests(self, path):
         self._dev_dependencies["pytest"] = "^3.0"