Index: source/blender/render/intern/source/convertblender.c
===================================================================
--- source/blender/render/intern/source/convertblender.c	(revision 12896)
+++ source/blender/render/intern/source/convertblender.c	(working copy)
@@ -3596,7 +3596,11 @@
 		
 		for(a=0; a<MAX_MTEX; a++) 
 			if(re->wrld.mtex[a] && re->wrld.mtex[a]->tex) re->wrld.skytype |= WO_SKYTEX;
-		
+	
+		// Sky shaders are handled as a special case of (procedural) textures
+		// so also set the WO_SKYTEX flag
+		if (re->wrld.skytype & WO_SKYSKY) re->wrld.skytype |= WO_SKYTEX;
+	
 		/* AO samples should be OSA minimum */
 		if(re->osa)
 			while(re->wrld.aosamp*re->wrld.aosamp < re->osa) 
Index: source/blender/render/intern/source/pixelshading.c
===================================================================
--- source/blender/render/intern/source/pixelshading.c	(revision 12896)
+++ source/blender/render/intern/source/pixelshading.c	(working copy)
@@ -55,6 +55,7 @@
 #include "rendercore.h"
 #include "shadbuf.h"
 #include "pixelshading.h"
+#include "skylight.h"
 
 /* ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ */
 /* defined in pipeline.c, is hardcopy of active dynamic allocated Render */
@@ -453,62 +454,132 @@
 	}
 }
 
-/* Only view vector is important here. Result goes to colf[3] */
+/** 
+ * Called to get sky (background) color.
+ * @param colf Place to put the result color (float[3]).
+ *  Place the RGB color of the background at direction "view" here.
+ * @param rco ???
+ * @param view The view vector (float[3]). 
+ * 	3 komponent vector indicating the view ray direction.
+ *  This vector vector is in camera space.
+ *  If you want view vector in world space multibly it with R.imat.
+ * @param dxyview ???
+ */ 
 void shadeSkyView(float *colf, float *rco, float *view, float *dxyview)
 {
 	float lo[3], zen[3], hor[3], blend, blendm;
 	int skyflag;
+	float sun[3], direction[3], d;
+
+    // todo: move these somewhere where they are initialized only ones per frame
+	Skylight sky;
+	ToneReproducer tone;
+
+
+	// Using physically generated sky color overwrites other options,
+	// but can be used only with real horizon
+	if ((R.wrld.skytype & WO_SKYREAL) && (R.wrld.skytype & WO_SKYSKY))
+	{
+		// If there is a control object for sun direction then use it's
+		// z-axis as sun direction
+		if (R.wrld.sun_object)
+		{
+			sun[0] = R.wrld.sun_object->obmat[2][0];
+			sun[1] = R.wrld.sun_object->obmat[2][1];
+			sun[2] = R.wrld.sun_object->obmat[2][2];
+		}
+		else // Otherwise calculate sun direction from the given angles
+		{
+			sun[0] = sin(R.wrld.sun_z_angle)*cos(R.wrld.sun_x_angle);
+			sun[1] = sin(R.wrld.sun_z_angle)*sin(R.wrld.sun_x_angle);
+			sun[2] = cos(R.wrld.sun_z_angle);
+		}
+
+		// todo: don't call these for every pixel
+		ToneReproducer_set_params(&tone, R.wrld.display_adaptation, R.wrld.world_adaptation);
+		Skylight_set_params(&sky, sun, R.wrld.turbidity);
+
+		// Transform view vector from camera-space to world-space
+		d = 1.0f/sqrt(view[0]*view[0]+view[1]*view[1]+view[2]*view[2]);
+		direction[0] = d*view[0];
+		direction[1] = d*view[1];
+		direction[2] = d*view[2];
+		MTC_Mat3MulVecfl(R.imat, direction);
+    
+		// If the pixel is below horizon check what to do
+		if (direction[2]<0)
+		{ 
+			if (R.wrld.skyshader_flags & WOSKYSHADER_BELOWHORIZON)
+			{
+				if (R.wrld.skyshader_flags & WOSKYSHADER_MIRRORHORIZON)
+					direction[2] = -direction[2];
+			}
+			else
+			{
+				colf[0] = 0;
+				colf[1] = 0;
+				colf[2] = 0;
+				return;
+			}
+		}
+
+		// Get the sky color and convert it to RGB
+		Skylight_get_xyY_value(&sky, direction, colf);
+		ToneReproducer_xyY_to_RGB(&tone, colf);
+	}
+	else // No physically generated sky use other options instead
+	{
+		// flag indicating if we render the top hemisphere
+		skyflag = WO_ZENUP;
 	
-	/* flag indicating if we render the top hemisphere */
-	skyflag = WO_ZENUP;
-	
-	/* Some view vector stuff. */
-	if(R.wrld.skytype & WO_SKYREAL) {
+		// Some view vector stuff.
+		if(R.wrld.skytype & WO_SKYREAL) {
+			
+			blend= view[0]*R.grvec[0]+ view[1]*R.grvec[1]+ view[2]*R.grvec[2];
 		
-		blend= view[0]*R.grvec[0]+ view[1]*R.grvec[1]+ view[2]*R.grvec[2];
+			if(blend<0.0) skyflag= 0;
 		
-		if(blend<0.0) skyflag= 0;
-		
-		blend= fabs(blend);
-	}
-	else if(R.wrld.skytype & WO_SKYPAPER) {
-		blend= 0.5+ 0.5*view[1];
-	}
-	else {
-		/* the fraction of how far we are above the bottom of the screen */
-		blend= fabs(0.5+ view[1]);
-	}
+			blend= fabs(blend);
+		}
+		else if(R.wrld.skytype & WO_SKYPAPER) {
+			blend= 0.5+ 0.5*view[1];
+		}
+		else {
+			// the fraction of how far we are above the bottom of the screen
+			blend= fabs(0.5+ view[1]);
+		}
 	
-	hor[0]= R.wrld.horr; hor[1]= R.wrld.horg; hor[2]= R.wrld.horb;
-	zen[0]= R.wrld.zenr; zen[1]= R.wrld.zeng; zen[2]= R.wrld.zenb;
+		hor[0]= R.wrld.horr; hor[1]= R.wrld.horg; hor[2]= R.wrld.horb;
+		zen[0]= R.wrld.zenr; zen[1]= R.wrld.zeng; zen[2]= R.wrld.zenb;
 	
-	/* Careful: SKYTEX and SKYBLEND are NOT mutually exclusive! If           */
-	/* SKYBLEND is active, the texture and color blend are added.           */
-	if(R.wrld.skytype & WO_SKYTEX) {
-		VECCOPY(lo, view);
-		if(R.wrld.skytype & WO_SKYREAL) {
+		// Careful: SKYTEX and SKYBLEND are NOT mutually exclusive! If           
+		// SKYBLEND is active, the texture and color blend are added.           
+		if(R.wrld.skytype & WO_SKYTEX) {
+			VECCOPY(lo, view);
+			if(R.wrld.skytype & WO_SKYREAL) {
+				
+				MTC_Mat3MulVecfl(R.imat, lo);
 			
-			MTC_Mat3MulVecfl(R.imat, lo);
+				SWAP(float, lo[1],  lo[2]);
 			
-			SWAP(float, lo[1],  lo[2]);
-			
+			}
+			do_sky_tex(rco, lo, dxyview, hor, zen, &blend, skyflag);
 		}
-		do_sky_tex(rco, lo, dxyview, hor, zen, &blend, skyflag);
-	}
 	
-	if(blend>1.0) blend= 1.0;
-	blendm= 1.0-blend;
+		if(blend>1.0) blend= 1.0;
+		blendm= 1.0-blend;
 	
-	/* No clipping, no conversion! */
-	if(R.wrld.skytype & WO_SKYBLEND) {
-		colf[0] = (blendm*hor[0] + blend*zen[0]);
-		colf[1] = (blendm*hor[1] + blend*zen[1]);
-		colf[2] = (blendm*hor[2] + blend*zen[2]);
-	} else {
-		/* Done when a texture was grabbed. */
-		colf[0]= hor[0];
-		colf[1]= hor[1];
-		colf[2]= hor[2];
+		// No clipping, no conversion! 
+		if(R.wrld.skytype & WO_SKYBLEND) {
+			colf[0] = (blendm*hor[0] + blend*zen[0]);
+			colf[1] = (blendm*hor[1] + blend*zen[1]);
+			colf[2] = (blendm*hor[2] + blend*zen[2]);
+		} else {
+			// Done when a texture was grabbed.
+			colf[0]= hor[0];
+			colf[1]= hor[1];
+			colf[2]= hor[2];
+		}
 	}
 }
 
@@ -569,3 +640,4 @@
 
 
 /* eof */
+
Index: source/blender/blenkernel/intern/world.c
===================================================================
--- source/blender/blenkernel/intern/world.c	(revision 12896)
+++ source/blender/blenkernel/intern/world.c	(working copy)
@@ -108,6 +108,16 @@
 	wrld->physicsEngine= WOPHY_BULLET;//WOPHY_SUMO; Bullet by default
 	wrld->preview = NULL;
 
+    // Init sky shader attributes
+    wrld->sun_x_angle = 1.57;
+    wrld->sun_z_angle = 0.8;
+    wrld->sun_object = 0;
+    wrld->skyshader = 0;
+    wrld->skyshader_flags = 0;
+    wrld->turbidity = 4;
+    wrld->world_adaptation = 40000.0f;
+    wrld->display_adaptation = 50.0f;
+    
 	return wrld;
 }
 
Index: source/blender/makesdna/DNA_world_types.h
===================================================================
--- source/blender/makesdna/DNA_world_types.h	(revision 12896)
+++ source/blender/makesdna/DNA_world_types.h	(working copy)
@@ -119,6 +119,16 @@
 
 	ScriptLink scriptlink;
 
+	// For sky color calculation
+	float sun_x_angle; // Sun angle from x axis 0-2pi
+	float sun_z_angle; // Sun angle from z-axis (zenith) 0-pi
+	struct Object *sun_object;  // Sun control object
+    short skyshader; // reserved for future to choose sky shader if more are added
+    short skyshader_flags; // flags
+	float turbidity; // 2 (clear) - 25 (haze)
+	float world_adaptation;
+	float display_adaptation;
+
 } World;
 
 /* **************** WORLD ********************* */
@@ -127,6 +137,7 @@
 #define WO_SKYBLEND		1
 #define WO_SKYREAL		2
 #define WO_SKYPAPER		4
+#define WO_SKYSKY		32
 /* while render: */
 #define WO_SKYTEX		8
 #define WO_ZENUP		16
@@ -177,5 +188,9 @@
 #define WOPHY_ODE		4
 #define WOPHY_BULLET	5
 
+/* Sky shader flags */
+#define WOSKYSHADER_BELOWHORIZON 1
+#define WOSKYSHADER_MIRRORHORIZON 2
+
 #endif
 
Index: source/blender/src/buttons_shading.c
===================================================================
--- source/blender/src/buttons_shading.c	(revision 12896)
+++ source/blender/src/buttons_shading.c	(working copy)
@@ -1943,6 +1943,38 @@
 	}
 }
 
+
+/**
+ * Creates the options panel for sky color generation controls.
+ * @param wrld Pointer to the World-struct
+ */
+static void world_panel_sky(World *wrld)
+{
+	// Add the panel as a tab to the preview panel
+	uiBlock *block;
+	block= uiNewBlock(&curarea->uiblocks, "world_panel_sky", UI_EMBOSS, UI_HELV, curarea->win);
+	uiNewPanelTabbed("Preview", "World");
+	if(uiNewPanel(curarea, block, "Sky", "World", 320, 0, 318, 204)==0) return;
+	uiSetButLock(wrld->id.lib!=0, ERROR_LIBDATA_MESSAGE);
+
+	// Eye luminance adaptation values
+	uiDefButF(block, NUM, B_WORLDPRV, "World adaptation:",10,230,220,19, &wrld->world_adaptation, 0.001f, 100000.0f, 1, 0, "Set eye world adaptation luminance");
+	uiDefButF(block, NUM, B_WORLDPRV, "Display adaptation:",10,250,220,19, &wrld->display_adaptation, 1.0f, 100.0f, 1, 0, "Set eye display adaptation luminance");
+
+	// Air tubidity control 2-25
+	uiDefButF(block, NUM, B_WORLDPRV, "Turbidity:",10,210,220,19, &wrld->turbidity, 2.0f, 25.0, 1, 0, "Set turbidity 2 (clear) - 25 (haze)");
+
+	// Sun direction controls angles and control object
+	uiDefButF(block, NUM, B_WORLDPRV, "Sun x angle:",	10,150,220,19,	&(wrld->sun_x_angle), 0.0, 6.28, 0, 0, "Angle between the sun direction and x-axis");
+	uiDefButF(block, NUM, B_WORLDPRV, "Sun z angle:",	10,170,220,19,	&(wrld->sun_z_angle), 0.0, 3.14, 0, 0, "Angle between the sun direction and z-axis (zenith)");
+	uiDefIDPoinBut(block, test_obpoin_but, ID_OB, B_WORLDPRV, "Ob:", 10,190,220,19, &(wrld->sun_object), "Object to use as sun direction");
+
+	// Flags about how to render below horizon
+	uiDefButBitS(block, TOG, WOSKYSHADER_BELOWHORIZON,  B_WORLDPRV, "Below horizon",  10, 270,110,19, &(wrld->skyshader_flags), 0, 0, 0, 0, "Also shade below horizon");
+	uiDefButBitS(block, TOG, WOSKYSHADER_MIRRORHORIZON, B_WORLDPRV, "Mirror horizon", 120,270,110,19, &(wrld->skyshader_flags), 0, 0, 0, 0, "Shade below horizon by mirroring values above it");
+}
+
+
 static void world_panel_mapto(World *wrld)
 {
 	uiBlock *block;
@@ -2277,9 +2309,10 @@
 	uiDefBut(block, LABEL, 0, " ",	20,20,10,10, 0, 0, 0, 0, 0, "");
 
 	uiBlockBeginAlign(block);
-	uiDefButBitS(block, TOG, WO_SKYREAL, B_WORLDPRV,"Real",	200,175,80,25, &wrld->skytype, 0, 0, 0, 0, "Renders background with a real horizon");
-	uiDefButBitS(block, TOG, WO_SKYBLEND, B_WORLDPRV,"Blend",200,150,80,25, &wrld->skytype, 0, 0, 0, 0, "Renders background with natural progression from horizon to zenith");
-	uiDefButBitS(block, TOG,WO_SKYPAPER, B_WORLDPRV,"Paper",200,125,80,25, &wrld->skytype, 0, 0, 0, 0, "Flattens blend or texture coordinates");
+	uiDefButBitS(block, TOG, WO_SKYREAL,  B_WORLDPRV, "Real",  200,175,80,25, &wrld->skytype, 0, 0, 0, 0, "Renders background with a real horizon");
+	uiDefButBitS(block, TOG, WO_SKYBLEND, B_WORLDPRV, "Blend", 200,150,80,25, &wrld->skytype, 0, 0, 0, 0, "Renders background with natural progression from horizon to zenith");
+	uiDefButBitS(block, TOG, WO_SKYPAPER, B_WORLDPRV, "Paper", 200,125,80,25, &wrld->skytype, 0, 0, 0, 0, "Flattens blend or texture coordinates");
+	uiDefButBitS(block, TOG, WO_SKYSKY,   B_WORLDPRV, "Sky",   200,100,80,25, &wrld->skytype, 0, 0, 0, 0, "Use physically based sky model to calculate color (overwrites blend and texture color)");
 	uiBlockEndAlign(block);
 
 }
@@ -4231,6 +4264,7 @@
 		world_panel_amb_occ(wrld);
 		world_panel_texture(wrld);
 		world_panel_mapto(wrld);
+		world_panel_sky(wrld);
 	}
 }
 
Index: source/blender/blenloader/intern/readfile.c
===================================================================
--- source/blender/blenloader/intern/readfile.c	(revision 12896)
+++ source/blender/blenloader/intern/readfile.c	(working copy)
@@ -6673,6 +6673,21 @@
 		Lamp *la;
 		Material *ma;
 		ParticleSettings *part;
+		World *wo;
+
+		// Set sky shader default settings
+		if (main->subversionfile==0) {
+			for (wo = main->world.first; wo; wo= wo->id.next) {
+				wo->sun_x_angle = 1.57;
+				wo->sun_z_angle = 0.8;
+				wo->sun_object = 0;
+				wo->skyshader = 0;
+				wo->skyshader_flags = 0;
+				wo->turbidity = 4;
+				wo->world_adaptation = 40000;
+				wo->display_adaptation = 50;
+			}
+		}
 		
 		/* unless the file was created 2.44.3 but not 2.45, update the constraints */
 		if ( !(main->versionfile==244 && main->subversionfile==3) &&