diff --git a/src/components/autocomplete/autocomplete.spec.js b/src/components/autocomplete/autocomplete.spec.js
index 9b3a41e6c3b..af5d9ff7133 100644
--- a/src/components/autocomplete/autocomplete.spec.js
+++ b/src/components/autocomplete/autocomplete.spec.js
@@ -102,7 +102,7 @@ describe('<md-autocomplete>', function() {
 
       element.remove();
     }));
-    
+
 
     it('should allow you to set an input id without floating label', inject(function() {
       var scope = createScope(null, {inputId: 'custom-input-id'});
@@ -321,6 +321,26 @@ describe('<md-autocomplete>', function() {
       element.remove();
     }));
 
+    it('should not show the progressbar when hitting escape on an empty input', inject(function($mdConstant, $timeout) {
+      var scope = createScope();
+      var template = '\
+          <md-autocomplete\
+              md-search-text="searchText"\
+              md-items="item in match(searchText)">\
+          </md-autocomplete>';
+      var element = compile(template, scope);
+      var ctrl = element.controller('mdAutocomplete');
+
+      $timeout.flush();
+      scope.$apply(function() {
+        ctrl.keydown(keydownEvent($mdConstant.KEY_CODE.ESCAPE));
+      });
+
+      expect(element.find('md-progress-linear').length).toBe(0);
+
+      element.remove();
+    }));
+
     it('should not close list on ENTER key if nothing is selected', inject(function($timeout, $mdConstant, $material) {
       var scope = createScope();
       var template = '\
diff --git a/src/components/autocomplete/js/autocompleteController.js b/src/components/autocomplete/js/autocompleteController.js
index ab23dbc9147..b897196189b 100644
--- a/src/components/autocomplete/js/autocompleteController.js
+++ b/src/components/autocomplete/js/autocompleteController.js
@@ -443,7 +443,7 @@ function MdAutocompleteCtrl ($scope, $element, $mdUtil, $mdConstant, $mdTheming,
       case $mdConstant.KEY_CODE.ESCAPE:
         event.stopPropagation();
         event.preventDefault();
-        clearValue();
+        if ($scope.searchText) clearValue();
 
         // Force the component to blur if they hit escape
         doBlur(true);