diff --git a/css/autocomplete.css b/css/autocomplete.css
index b14d5d35..1128e98f 100644
--- a/css/autocomplete.css
+++ b/css/autocomplete.css
@@ -18,10 +18,9 @@
 }
 
 .ngTagsInput .autocomplete li.suggestion {
-    padding: 3px 20px;
-    font-family: Arial, sans-serif;
-    font-size: 18px;
-    line-height: 22px;
+    padding: 3px 16px;
+    font-family: "Helvetica Neue", Helvetica, Arial, sans-serif;
+    line-height: 20px;
     cursor: pointer;
     text-align: left;
     white-space: nowrap;
@@ -32,4 +31,9 @@
 .ngTagsInput .autocomplete li.selected {
     color: #fff;
     background-color: #0097cf
+}
+
+.ngTagsInput .autocomplete li em {
+    font-weight: bold;
+    font-style: normal;
 }
\ No newline at end of file
diff --git a/css/tags-input.css b/css/tags-input.css
index 3590e12e..28cf9e73 100644
--- a/css/tags-input.css
+++ b/css/tags-input.css
@@ -59,7 +59,7 @@
 }
 
 .ngTagsInput .tags span {
-    font: 13px Arial, sans-serif;
+    font: 13px "Helvetica Neue", Helvetica, Arial, sans-serif;
 }
 
 .ngTagsInput .tags button {
@@ -83,7 +83,7 @@
     padding: 0px 0px 0px 4px;
     height: 21px;
     float: left;
-    font: 13px Arial, sans-serif;
+    font: 13px "Helvetica Neue", Helvetica, Arial, sans-serif;
 }
 
 .ngTagsInput .tags input::-ms-clear {
diff --git a/src/auto-complete.js b/src/auto-complete.js
index 27c06187..3329860e 100644
--- a/src/auto-complete.js
+++ b/src/auto-complete.js
@@ -8,14 +8,16 @@
  * @description
  * Provides autocomplete support for the tagsInput directive.
  *
- * @param {expression} source Expression to evaluate upon changing the input content. The input value is available as $text.
- *                            The result of the expression must be a promise that resolves to an array of strings.
- * @param {number=} [debounceDelay=100] Amount of time, in milliseconds, to wait after the last keystroke before evaluating
- *                                      the expression in the source option.
- * @param {number=3} [minLength=3] Minimum number of characters that must be entered before evaluating the expression
+ * @param {expression} source Expression to evaluate upon changing the input content. The input value is available as
+ *                            $query. The result of the expression must be a promise that resolves to an array of strings.
+ * @param {number=} [debounceDelay=100] Amount of time, in milliseconds, to wait after the last keystroke before
+ *                                      evaluating the expression in the source option.
+ * @param {number=} [minLength=3] Minimum number of characters that must be entered before evaluating the expression
  *                                 in the source option.
+ * @param {boolean=} [highlightMatchedText=true] Flag indicating that the matched text will be highlighted in the
+ *                                               suggestions list.
  */
-angular.module('tags-input').directive('autoComplete', function($document, $timeout, configuration) {
+angular.module('tags-input').directive('autoComplete', function($document, $timeout, $sce, configuration) {
     function SuggestionList(loadFn, options) {
         var self = {}, debouncedLoadId;
 
@@ -24,6 +26,7 @@ angular.module('tags-input').directive('autoComplete', function($document, $time
             self.visible = false;
             self.index = -1;
             self.selected = null;
+            self.query = null;
 
             $timeout.cancel(debouncedLoadId);
         };
@@ -34,15 +37,16 @@ angular.module('tags-input').directive('autoComplete', function($document, $time
         self.hide = function() {
             self.visible = false;
         };
-        self.load = function(text) {
-            if (text.length < options.minLength) {
+        self.load = function(query) {
+            if (query.length < options.minLength) {
                 self.reset();
                 return;
             }
 
             $timeout.cancel(debouncedLoadId);
             debouncedLoadId = $timeout(function() {
-                loadFn({ $text: text }).then(function(items) {
+                self.query = query;
+                loadFn({ $query: query }).then(function(items) {
                     self.items = items;
                     if (items.length > 0) {
                         self.show();
@@ -81,22 +85,36 @@ angular.module('tags-input').directive('autoComplete', function($document, $time
                   '    <li class="suggestion" ng-repeat="item in suggestionList.items"' +
                   '                           ng-class="{selected: item == suggestionList.selected}"' +
                   '                           ng-click="addSuggestion()"' +
-                  '                           ng-mouseenter="suggestionList.select($index)">{{ item }}</li>' +
+                  '                           ng-mouseenter="suggestionList.select($index)"' +
+                  '                           ng-bind-html="highlight(item)"></li>' +
                   '  </ul>' +
                   '</div>',
         link: function(scope, element, attrs, tagsInputCtrl) {
             var hotkeys = [KEYS.enter, KEYS.tab, KEYS.escape, KEYS.up, KEYS.down],
-                suggestionList, tagsInput, input;
+                suggestionList, tagsInput, input, highlight;
 
             configuration.load(scope, attrs, {
                 debounceDelay: { type: Number, defaultValue: 100 },
-                minLength: { type: Number, defaultValue: 3 }
+                minLength: { type: Number, defaultValue: 3 },
+                highlightMatchedText: { type: Boolean, defaultValue: true }
             });
 
             suggestionList = new SuggestionList(scope.source, scope.options);
             tagsInput = tagsInputCtrl.registerAutocomplete();
             input = tagsInput.input;
 
+            if (scope.options.highlightMatchedText) {
+                highlight = function(item, text) {
+                    var expression = new RegExp(text, 'gi');
+                    return item.replace(expression, '<em>$&</em>');
+                };
+            }
+            else {
+                highlight = function(item) {
+                    return item;
+                };
+            }
+
             scope.suggestionList = suggestionList;
 
             scope.addSuggestion = function() {
@@ -112,6 +130,10 @@ angular.module('tags-input').directive('autoComplete', function($document, $time
                 return added;
             };
 
+            scope.highlight = function(item) {
+                return $sce.trustAsHtml(highlight(item, suggestionList.query));
+            };
+
             input.change(function(value) {
                 if (value) {
                     suggestionList.load(value);
diff --git a/test/auto-complete.spec.js b/test/auto-complete.spec.js
index 6013534c..954ffe64 100644
--- a/test/auto-complete.spec.js
+++ b/test/auto-complete.spec.js
@@ -41,7 +41,7 @@ describe('autocomplete-directive', function() {
         spyOn(parentCtrl, 'registerAutocomplete').andReturn(tagsInput);
 
         options = jQuery.makeArray(arguments).join(' ');
-        element = angular.element('<auto-complete source="loadItems($text)" ' + options + '></auto-complete>');
+        element = angular.element('<auto-complete source="loadItems($query)" ' + options + '></auto-complete>');
         parent.append(element);
 
         $compile(element)($scope);
@@ -88,8 +88,8 @@ describe('autocomplete-directive', function() {
         return !getSuggestionsBox().hasClass('ng-hide');
     }
 
-    function loadSuggestions(items) {
-        suggestionList.load('foobar');
+    function loadSuggestions(items, text) {
+        suggestionList.load(text || 'foobar');
         $timeout.flush();
         resolve(items);
     }
@@ -629,6 +629,63 @@ describe('autocomplete-directive', function() {
             expect(isSuggestionsBoxVisible()).toBe(false);
         });
     });
+
+    describe('highlight-matched-text option', function() {
+        it('initializes the option to true', function() {
+            // Arrange/Act
+            compile();
+
+            // Assert
+            expect(isolateScope.options.highlightMatchedText).toBe(true);
+        });
+
+        it('sets the option given a static string', function() {
+            // Arrange/Act
+            compile('highlight-matched-text="false"');
+
+            // Assert
+            expect(isolateScope.options.highlightMatchedText).toBe(false);
+        });
+
+        it('sets the option given an interpolated string', function() {
+            // Arrange/Act
+            $scope.value = false;
+            compile('highlight-matched-text="{{ value }}"');
+
+            // Assert
+            expect(isolateScope.options.highlightMatchedText).toBe(false);
+        });
+
+        it('highlights the matched text in the suggestions list', function() {
+            // Arrange
+            compile('highlight-matched-text="true"', 'min-length="1"');
+
+            // Act
+            loadSuggestions(['a', 'ab', 'ba', 'aba', 'bab'], 'a');
+
+            // Assert
+            expect(getSuggestionText(0)).toBe('<em>a</em>');
+            expect(getSuggestionText(1)).toBe('<em>a</em>b');
+            expect(getSuggestionText(2)).toBe('b<em>a</em>');
+            expect(getSuggestionText(3)).toBe('<em>a</em>b<em>a</em>');
+            expect(getSuggestionText(4)).toBe('b<em>a</em>b');
+        });
+
+        it('doesn\'t highlight the matched text in the suggestions list whe the option is false', function() {
+            // Arrange
+            compile('highlight-matched-text="false"', 'min-length="1"');
+
+            // Act
+            loadSuggestions(['a', 'ab', 'ba', 'aba', 'bab'], 'a');
+
+            // Assert
+            expect(getSuggestionText(0)).toBe('a');
+            expect(getSuggestionText(1)).toBe('ab');
+            expect(getSuggestionText(2)).toBe('ba');
+            expect(getSuggestionText(3)).toBe('aba');
+            expect(getSuggestionText(4)).toBe('bab');
+        });
+    });
 });
 
 })();
diff --git a/test/test-page.html b/test/test-page.html
index ebcf5a79..3baa6061 100644
--- a/test/test-page.html
+++ b/test/test-page.html
@@ -8,18 +8,18 @@
 </head>
 <body ng-controller="Ctrl">
   <tags-input ng-model="tags" placeholder="{{ placeholder.value }}">
-    <auto-complete source="loadItems($text)" debounce-delay="100" min-length="10"></auto-complete>
+    <auto-complete source="loadItems($query)" debounce-delay="0" min-length="1" highlight-matched-text="true"></auto-complete>
   </tags-input>
 
   <script type="text/javascript">
     angular.module('app', ['tags-input'])
         .controller('Ctrl', function($scope, $q) {
-            $scope.tags = ['some', 'cool', 'tags'];
+            $scope.tags = ['Batman', 'Superman', 'Flash'];
             $scope.placeholder = {value: "New tag" };
             $scope.loadItems = function(text) {
               console.log(text);
               var deferred = $q.defer();
-              deferred.resolve(['Item1', 'Item2', 'Item3']);
+              deferred.resolve(['Batman', 'Superman', 'Flash', 'Iron Man', 'Hulk', 'Wolverine', "Green Lantern", "Green Arrow", "Spiderman"]);
               return deferred.promise;
             };
         });