diff --git a/activesupport/CHANGELOG b/activesupport/CHANGELOG
index 5d79c19385..5470555d8e 100644
--- a/activesupport/CHANGELOG
+++ b/activesupport/CHANGELOG
@@ -1,5 +1,7 @@
 *SVN*
 
+* Correctly convert <foo nil="true"> to nil when using Hash.create_from_xml.  [Rick]
+
 * Optional identity for Enumerable#sum defaults to zero. #5657 [gensym@mac.com]
 
 * HashWithIndifferentAccess shouldn't confuse false and nil. #5601 [shugo@ruby-lang.org]
diff --git a/activesupport/lib/active_support/core_ext/hash/conversions.rb b/activesupport/lib/active_support/core_ext/hash/conversions.rb
index 1e7f8eb68d..7927a39d44 100644
--- a/activesupport/lib/active_support/core_ext/hash/conversions.rb
+++ b/activesupport/lib/active_support/core_ext/hash/conversions.rb
@@ -101,7 +101,7 @@ module ActiveSupport #:nodoc:
                       else                 content
                     end
                   else
-                    value.empty? ? nil : value.inject({}) do |h,(k,v)|
+                    value.empty? || value['nil'] == 'true' ? nil : value.inject({}) do |h,(k,v)|
                       h[k] = typecast_xml_value(v)
                       h
                     end
diff --git a/activesupport/test/core_ext/hash_ext_test.rb b/activesupport/test/core_ext/hash_ext_test.rb
index 2afdf95c4d..bcb4b43af0 100644
--- a/activesupport/test/core_ext/hash_ext_test.rb
+++ b/activesupport/test/core_ext/hash_ext_test.rb
@@ -352,7 +352,7 @@ class HashToXmlTest < Test::Unit::TestCase
           <viewed-at type="datetime">2003-07-16T09:28:00+0000</viewed-at>
           <content>Have a nice day</content>
           <author-email-address>david@loudthinking.com</author-email-address>
-          <parent-id></parent-id>
+          <parent-id nil="true"></parent-id>
         </topic>
         <topic>
           <title>The Second Topic</title>