diff --git a/browser/app/profile/firefox.js b/browser/app/profile/firefox.js
index 4bd970bc093..821d68f8a24 100644
--- a/browser/app/profile/firefox.js
+++ b/browser/app/profile/firefox.js
@@ -1033,6 +1033,12 @@ pref("devtools.hud.loglimit.cssparser", 200);
 pref("devtools.hud.loglimit.exception", 200);
 pref("devtools.hud.loglimit.console", 200);
 
+// The developer tools editor configuration:
+// - tabsize: how many spaces to use when a Tab character is displayed.
+// - expandtab: expand Tab characters to spaces.
+pref("devtools.editor.tabsize", 4);
+pref("devtools.editor.expandtab", true);
+
 // Whether the character encoding menu is under the main Firefox button. This
 // preference is a string so that localizers can alter it.
 pref("browser.menu.showCharacterEncoding", "chrome://browser/locale/browser.properties");
diff --git a/browser/base/content/scratchpad.js b/browser/base/content/scratchpad.js
index 6781d02c052..abb932cd266 100644
--- a/browser/base/content/scratchpad.js
+++ b/browser/base/content/scratchpad.js
@@ -64,6 +64,9 @@ const SCRATCHPAD_L10N = "chrome://browser/locale/scratchpad.properties";
 const SCRATCHPAD_WINDOW_FEATURES = "chrome,titlebar,toolbar,centerscreen,resizable,dialog=no";
 const DEVTOOLS_CHROME_ENABLED = "devtools.chrome.enabled";
 
+const PREF_TABSIZE = "devtools.editor.tabsize";
+const PREF_EXPANDTAB = "devtools.editor.expandtab";
+
 /**
  * The scratchpad object handles the Scratchpad window functionality.
  */
@@ -628,7 +631,53 @@ var Scratchpad = {
       errorConsoleCommand.removeAttribute("disabled");
       chromeContextCommand.removeAttribute("disabled");
     }
+
+    let tabsize = Services.prefs.getIntPref(PREF_TABSIZE);
+    if (tabsize < 1) {
+      // tabsize is invalid, clear back to the default value.
+      Services.prefs.clearUserPref(PREF_TABSIZE);
+      tabsize = Services.prefs.getIntPref(PREF_TABSIZE);
+    }
+
+    let expandtab = Services.prefs.getBoolPref(PREF_EXPANDTAB);
+    this._tabCharacter = expandtab ? (new Array(tabsize + 1)).join(" ") : "\t";
+    this.textbox.style.MozTabSize = tabsize;
+
     this.insertIntro();
+
+    // Make the Tab key work.
+    this.textbox.addEventListener("keypress", this.onKeypress.bind(this), false);
+
+    this.textbox.focus();
+  },
+
+  /**
+   * The textbox keypress event handler which allows users to indent code using
+   * the Tab key.
+   *
+   * @param nsIDOMEvent aEvent
+   */
+  onKeypress: function SP_onKeypress(aEvent)
+  {
+    if (aEvent.keyCode == aEvent.DOM_VK_TAB) {
+      this.insertTextAtCaret(this._tabCharacter);
+      aEvent.preventDefault();
+    }
+  },
+
+  /**
+   * Insert text at the current caret location.
+   *
+   * @param string aText
+   */
+  insertTextAtCaret: function SP_insertTextAtCaret(aText)
+  {
+    let firstPiece = this.textbox.value.substring(0, this.textbox.selectionStart);
+    let lastPiece = this.textbox.value.substring(this.textbox.selectionEnd);
+    this.textbox.value = firstPiece + aText + lastPiece;
+
+    let newCaretPosition = firstPiece.length + aText.length;
+    this.selectRange(newCaretPosition, newCaretPosition);
   },
 };
 
diff --git a/browser/base/content/test/Makefile.in b/browser/base/content/test/Makefile.in
index 4915d246214..73260d58464 100644
--- a/browser/base/content/test/Makefile.in
+++ b/browser/base/content/test/Makefile.in
@@ -201,6 +201,7 @@ _BROWSER_FILES = \
                  browser_scratchpad_files.js \
                  browser_scratchpad_ui.js \
                  browser_scratchpad_bug_646070_chrome_context_pref.js \
+                 browser_scratchpad_bug_660560_tab.js \
                  browser_overflowScroll.js \
                  browser_locationBarExternalLoad.js \
                  browser_pageInfo.js \
diff --git a/browser/base/content/test/browser_scratchpad_bug_660560_tab.js b/browser/base/content/test/browser_scratchpad_bug_660560_tab.js
new file mode 100644
index 00000000000..eca5ea2f86f
--- /dev/null
+++ b/browser/base/content/test/browser_scratchpad_bug_660560_tab.js
@@ -0,0 +1,116 @@
+/* vim: set ts=2 et sw=2 tw=80: */
+/* Any copyright is dedicated to the Public Domain.
+   http://creativecommons.org/publicdomain/zero/1.0/ */
+
+// Reference to the Scratchpad chrome window object.
+let gScratchpadWindow;
+
+function test()
+{
+  waitForExplicitFinish();
+
+  gBrowser.selectedTab = gBrowser.addTab();
+  gBrowser.selectedBrowser.addEventListener("load", function() {
+    gBrowser.selectedBrowser.removeEventListener("load", arguments.callee, true);
+
+    ok(window.Scratchpad, "Scratchpad variable exists");
+
+    Services.prefs.setIntPref("devtools.editor.tabsize", 5);
+
+    gScratchpadWindow = Scratchpad.openScratchpad();
+    gScratchpadWindow.addEventListener("load", runTests, false);
+  }, true);
+
+  content.location = "data:text/html,Scratchpad test for the Tab key, bug 660560";
+}
+
+function runTests()
+{
+  gScratchpadWindow.removeEventListener("load", arguments.callee, false);
+
+  let sp = gScratchpadWindow.Scratchpad;
+  ok(sp, "Scratchpad object exists in new window");
+
+  is(gScratchpadWindow.document.activeElement, sp.textbox.inputField,
+     "The textbox has focus");
+
+  is(sp.textbox.style.MozTabSize, 5, "-moz-tab-size is correct");
+
+  sp.textbox.value = "window.foo;";
+  sp.selectRange(1, 3);
+
+  EventUtils.synthesizeKey("VK_TAB", {}, gScratchpadWindow);
+
+  is(sp.textbox.value, "w     dow.foo;",
+     "Tab key added 5 spaces");
+
+  is(sp.textbox.selectionStart, 6, "caret location is correct");
+
+  is(sp.textbox.selectionStart, sp.textbox.selectionEnd,
+     "caret location is correct, confirmed");
+
+  // Test the new insertTextAtCaret() method.
+
+  sp.insertTextAtCaret("omg");
+
+  is(sp.textbox.value, "w     omgdow.foo;", "insertTextAtCaret() works");
+
+  is(sp.textbox.selectionStart, 9, "caret location is correct after update");
+
+  is(sp.textbox.selectionStart, sp.textbox.selectionEnd,
+     "caret location is correct, confirmed");
+
+  gScratchpadWindow.close();
+
+  Services.prefs.setIntPref("devtools.editor.tabsize", 6);
+  Services.prefs.setBoolPref("devtools.editor.expandtab", false);
+  gScratchpadWindow = Scratchpad.openScratchpad();
+  gScratchpadWindow.addEventListener("load", runTests2, false);
+}
+
+function runTests2()
+{
+  gScratchpadWindow.removeEventListener("load", arguments.callee, false);
+
+  let sp = gScratchpadWindow.Scratchpad;
+
+  is(sp.textbox.style.MozTabSize, 6, "-moz-tab-size is correct");
+
+  sp.textbox.value = "window.foo;";
+  sp.selectRange(1, 3);
+
+  EventUtils.synthesizeKey("VK_TAB", {}, gScratchpadWindow);
+
+  is(sp.textbox.value, "w\tdow.foo;", "Tab key added the tab character");
+
+  is(sp.textbox.selectionStart, 2, "caret location is correct");
+
+  is(sp.textbox.selectionStart, sp.textbox.selectionEnd,
+     "caret location is correct, confirmed");
+
+  gScratchpadWindow.close();
+
+  // check with an invalid tabsize value.
+  Services.prefs.setIntPref("devtools.editor.tabsize", 0);
+  Services.prefs.setBoolPref("devtools.editor.expandtab", true);
+  gScratchpadWindow = Scratchpad.openScratchpad();
+  gScratchpadWindow.addEventListener("load", runTests3, false);
+}
+
+function runTests3()
+{
+  gScratchpadWindow.removeEventListener("load", arguments.callee, false);
+
+  let sp = gScratchpadWindow.Scratchpad;
+
+  is(sp.textbox.style.MozTabSize, 4, "-moz-tab-size is correct");
+
+  Services.prefs.clearUserPref("devtools.editor.tabsize");
+  Services.prefs.clearUserPref("devtools.editor.expandtab");
+
+  gScratchpadWindow.close();
+  gScratchpadWindow = null;
+
+  gBrowser.removeCurrentTab();
+  finish();
+}