diff --git a/.gitignore b/.gitignore
index 67bb3d1d..65c111c0 100644
--- a/.gitignore
+++ b/.gitignore
@@ -34,3 +34,6 @@ nosetests.xml
 .mr.developer.cfg
 .project
 .pydevproject
+
+# Special file for testing ignored files
+testfile-for-gitignore
diff --git a/gutter_handlers.py b/gutter_handlers.py
index 2a6fdb2b..f3bfd47c 100644
--- a/gutter_handlers.py
+++ b/gutter_handlers.py
@@ -52,6 +52,18 @@ def _get_view_encoding(self):
         encoding = encoding.replace(' ', '')
         return encoding
 
+    @staticmethod
+    def _to_unix(contents):
+        contents = contents.replace(b'\r\n', b'\n')
+        contents = contents.replace(b'\r', b'\n')
+        return contents
+
+    @staticmethod
+    def _write(name, contents):
+        f = open(name, 'wb')
+        f.write(contents)
+        f.close()
+
     def update_buf_file(self):
         chars = self.view.size()
         region = sublime.Region(0, chars)
@@ -63,10 +75,8 @@ def update_buf_file(self):
             # Fallback to utf8-encoding
             contents = self.view.substr(region).encode('utf-8')
 
-        contents = contents.replace(b'\r\n', b'\n')
-        f = open(self.buf_temp_file.name, 'wb')
-        f.write(contents)
-        f.close()
+        contents = VcsGutterHandler._to_unix(contents)
+        VcsGutterHandler._write(self.buf_temp_file.name, contents)
 
     def total_lines(self):
         chars = self.view.size()
@@ -81,15 +91,23 @@ def update_vcs_file(self):
         # between updates for performance
         if ViewCollection.vcs_time(self.view) > 5:
             open(self.vcs_temp_file.name, 'w').close()
+            status_args = self.get_status_args()
+            status = None
+            try:
+                contents, errors = self.run_command(status_args)
+                status = self.process_status_line(contents)
+                ViewCollection.update_vcs_status(self.view, status)
+            except Exception as e:
+                # print e
+                pass
+
             args = self.get_diff_args()
             try:
-                contents = self.run_command(args)
-                contents = contents.replace(b'\r\n', b'\n')
-                contents = contents.replace(b'\r', b'\n')
-                f = open(self.vcs_temp_file.name, 'wb')
-                f.write(contents)
-                f.close()
-                ViewCollection.update_vcs_time(self.view)
+                if status == 'M':
+                    contents, errors = self.run_command(args)
+                    contents = VcsGutterHandler._to_unix(contents)
+                    VcsGutterHandler._write(self.vcs_temp_file.name, contents)
+                    ViewCollection.update_vcs_time(self.view)
             except Exception as e:
                 print ("Unable to write file for diff ", e)
 
@@ -123,9 +141,16 @@ def process_diff(self, diff_str):
             # this means this file is either:
             # - New and not being tracked *yet*
             # - Or it is a *gitignored* file
-            return ([], [], [])
+            status = ViewCollection.vcs_status(self.view)
+            if status == 'U':
+                # use special region 'unknown'
+                return ([], [], [], inserted, [])
+            elif status == 'I':
+                # use special region 'ignored'
+                return ([], [], [], [], inserted)
+            return (inserted, modified, deleted, [], [])
         else:
-            return (inserted, modified, deleted)
+            return (inserted, modified, deleted, [], [])
 
     def diff(self):
         if self.on_disk() and self.vcs_path:
@@ -136,19 +161,20 @@ def diff(self):
                 self.vcs_temp_file.name,
                 self.buf_temp_file.name,
             ]
-            results = self.run_command(args)
+            results, errors = self.run_command(args)
+            # print errors
             return self.process_diff(results)
         else:
-            return ([], [], [])
+            return ([], [], [], [])
 
     def run_command(self, args):
         startupinfo = None
         if os.name == 'nt':
             startupinfo = subprocess.STARTUPINFO()
             startupinfo.dwFlags |= subprocess.STARTF_USESHOWWINDOW
-        proc = subprocess.Popen(args, stdout=subprocess.PIPE,
+        proc = subprocess.Popen(args, stdout=subprocess.PIPE, stderr=subprocess.PIPE,
                                 startupinfo=startupinfo)
-        return proc.stdout.read()
+        return proc.stdout.read(), proc.stderr.read()
 
 
 class GitGutterHandler(VcsGutterHandler):
@@ -165,6 +191,28 @@ def get_diff_args(self):
         ]
         return args
 
+    def get_status_args(self):
+        args = [
+            self.exc_path,
+            '--git-dir=' + self.vcs_dir,
+            '--work-tree=' + self.vcs_tree,
+            'status',
+            '--ignored',
+            '--porcelain',
+            self.vcs_path,
+        ]
+        return args
+
+    def process_status_line(self, st):
+        st = st[0:2]
+        if st == '!!':
+            return 'I'
+        elif st == '??':
+            return 'U'
+        else:
+            return 'M'
+            # all other states we may consider as modified
+
 
 class HgGutterHandler(VcsGutterHandler):
     def get_vcs_helper(self):
@@ -180,6 +228,32 @@ def get_diff_args(self):
         ]
         return args
 
+    def get_status_args(self):
+        args = [
+            self.exc_path,
+            '--repository',
+            self.vcs_tree,
+            'status',
+            '--added',
+            '--modified',
+            '--unknown',
+            '--ignored',
+            '--color',
+            'never',
+            os.path.join(self.vcs_tree, self.vcs_path),
+        ]
+        return args
+
+    def process_status_line(self, st):
+        st = st[0:1]
+        if st == 'I':
+            return 'I'
+        elif st == '?':
+            return 'U'
+        else:
+            return 'M'
+            # all other states we may consider as modified
+
 
 class SvnGutterHandler(VcsGutterHandler):
     def get_vcs_helper(self):
@@ -192,3 +266,21 @@ def get_diff_args(self):
             os.path.join(self.vcs_tree, self.vcs_path),
         ]
         return args
+
+    def get_status_args(self):
+        args = [
+            self.exc_path,
+            'status',
+            os.path.join(self.vcs_tree, self.vcs_path),
+        ]
+        return args
+
+    def process_status_line(self, st):
+        st = st[0:1]
+        if st == 'I':
+            return 'I'
+        elif st == '?':
+            return 'U'
+        else:
+            return 'M'
+            # all other states we may consider as modified
diff --git a/icons/ignored.png b/icons/ignored.png
new file mode 100755
index 00000000..eed3c3ed
Binary files /dev/null and b/icons/ignored.png differ
diff --git a/icons/unknown.png b/icons/unknown.png
new file mode 100755
index 00000000..7ccda2be
Binary files /dev/null and b/icons/unknown.png differ
diff --git a/vcs_gutter.py b/vcs_gutter.py
index a4c26818..df3c605e 100644
--- a/vcs_gutter.py
+++ b/vcs_gutter.py
@@ -22,7 +22,8 @@ def plugin_loaded():
 
 class VcsGutterCommand(sublime_plugin.WindowCommand):
     region_names = ['deleted_top', 'deleted_bottom',
-                    'deleted_dual', 'inserted', 'changed']
+                    'deleted_dual', 'inserted', 'changed',
+                    'unknown', 'ignored']
 
     def run(self):
         self.view = self.window.active_view()
@@ -31,10 +32,12 @@ def run(self):
             sublime.set_timeout(self.run, 1)
             return
         self.clear_all()
-        inserted, modified, deleted = ViewCollection.diff(self.view)
+        inserted, modified, deleted, unknown, ignored = ViewCollection.diff(self.view)
         self.lines_removed(deleted)
         self.bind_icons('inserted', inserted)
         self.bind_icons('changed', modified)
+        self.bind_icons('unknown', unknown)
+        self.bind_icons('ignored', ignored)
 
     def clear_all(self):
         for region_name in self.region_names:
diff --git a/view_collection.py b/view_collection.py
index a75d74f9..826d50a5 100644
--- a/view_collection.py
+++ b/view_collection.py
@@ -12,6 +12,7 @@
 class ViewCollection:
     views = {}
     vcs_times = {}
+    vcs_statuses = {}
     vcs_files = {}
     buf_files = {}
 
@@ -69,11 +70,23 @@ def vcs_time(view):
             ViewCollection.vcs_times[key] = 0
         return time.time() - ViewCollection.vcs_times[key]
 
+    @staticmethod
+    def vcs_status(view):
+        key = ViewCollection.get_key(view)
+        if not key in ViewCollection.vcs_statuses:
+            ViewCollection.vcs_statuses[key] = 'M'
+        return ViewCollection.vcs_statuses[key]
+
     @staticmethod
     def update_vcs_time(view):
         key = ViewCollection.get_key(view)
         ViewCollection.vcs_times[key] = time.time()
 
+    @staticmethod
+    def update_vcs_status(view, status):
+        key = ViewCollection.get_key(view)
+        ViewCollection.vcs_statuses[key] = status
+
     @staticmethod
     def vcs_tmp_file(view):
         key = ViewCollection.get_key(view)