diff --git a/CHANGELOG.md b/CHANGELOG.md
index a722d4548..7be3fbc6b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -6,6 +6,7 @@ FEATURES:
 
 - Transaction indexing - txs are indexed by their hash using a simple key-value store; easily extended to more advanced indexers
 - New `/tx?hash=X` endpoint to query for transactions and their DeliverTx result by hash. Optionally returns a proof of the tx's inclusion in the block
+- `tendermint testnet` command initializes files for a testnet
 
 IMPROVEMENTS:
 
diff --git a/cmd/tendermint/commands/testnet.go b/cmd/tendermint/commands/testnet.go
new file mode 100644
index 000000000..0a2e00ad0
--- /dev/null
+++ b/cmd/tendermint/commands/testnet.go
@@ -0,0 +1,93 @@
+package commands
+
+import (
+	"fmt"
+	"path"
+	"time"
+
+	"github.com/spf13/cobra"
+
+	cmn "github.com/tendermint/go-common"
+	"github.com/tendermint/tendermint/types"
+)
+
+var testnetFilesCmd = &cobra.Command{
+	Use:   "testnet",
+	Short: "Initialize files for a Tendermint testnet",
+	Run:   testnetFiles,
+}
+
+//flags
+var (
+	nValidators int
+	dataDir     string
+)
+
+func init() {
+	testnetFilesCmd.Flags().IntVar(&nValidators, "n", 4,
+		"Number of validators to initialize the testnet with")
+	testnetFilesCmd.Flags().StringVar(&dataDir, "dir", "mytestnet",
+		"Directory to store initialization data for the testnet")
+
+	RootCmd.AddCommand(testnetFilesCmd)
+}
+
+func testnetFiles(cmd *cobra.Command, args []string) {
+
+	genVals := make([]types.GenesisValidator, nValidators)
+
+	// Initialize core dir and priv_validator.json's
+	for i := 0; i < nValidators; i++ {
+		mach := cmn.Fmt("mach%d", i)
+		err := initMachCoreDirectory(dataDir, mach)
+		if err != nil {
+			cmn.Exit(err.Error())
+		}
+		// Read priv_validator.json to populate vals
+		privValFile := path.Join(dataDir, mach, "priv_validator.json")
+		privVal := types.LoadPrivValidator(privValFile)
+		genVals[i] = types.GenesisValidator{
+			PubKey: privVal.PubKey,
+			Amount: 1,
+			Name:   mach,
+		}
+	}
+
+	// Generate genesis doc from generated validators
+	genDoc := &types.GenesisDoc{
+		GenesisTime: time.Now(),
+		ChainID:     "chain-" + cmn.RandStr(6),
+		Validators:  genVals,
+	}
+
+	// Write genesis file.
+	for i := 0; i < nValidators; i++ {
+		mach := cmn.Fmt("mach%d", i)
+		genDoc.SaveAs(path.Join(dataDir, mach, "genesis.json"))
+	}
+
+	fmt.Println(cmn.Fmt("Successfully initialized %v node directories", nValidators))
+}
+
+// Initialize per-machine core directory
+func initMachCoreDirectory(base, mach string) error {
+	dir := path.Join(base, mach)
+	err := cmn.EnsureDir(dir, 0777)
+	if err != nil {
+		return err
+	}
+
+	// Create priv_validator.json file if not present
+	ensurePrivValidator(path.Join(dir, "priv_validator.json"))
+	return nil
+
+}
+
+func ensurePrivValidator(file string) {
+	if cmn.FileExists(file) {
+		return
+	}
+	privValidator := types.GenPrivValidator()
+	privValidator.SetFile(file)
+	privValidator.Save()
+}