diff --git a/mcs/class/System.Transactions/Makefile b/mcs/class/System.Transactions/Makefile
index 9320a7a29e28..6b640bf40406 100644
--- a/mcs/class/System.Transactions/Makefile
+++ b/mcs/class/System.Transactions/Makefile
@@ -3,7 +3,7 @@ SUBDIRS =
 include ../../build/rules.make
 
 LIBRARY = System.Transactions.dll
-LIB_MCS_FLAGS = /r:$(corlib) /r:System.dll
+LIB_MCS_FLAGS = /r:$(corlib) /r:System.dll /r:System.Configuration.dll
 
 TEST_MCS_FLAGS = /nowarn:1595 $(LIB_MCS_FLAGS)
 
diff --git a/mcs/class/System.Transactions/System.Transactions.dll.sources b/mcs/class/System.Transactions/System.Transactions.dll.sources
index 16c2228177dc..36d981ebe951 100644
--- a/mcs/class/System.Transactions/System.Transactions.dll.sources
+++ b/mcs/class/System.Transactions/System.Transactions.dll.sources
@@ -33,3 +33,6 @@ System.Transactions/TransactionPromotionException.cs
 System.Transactions/TransactionScope.cs
 System.Transactions/TransactionScopeOption.cs
 System.Transactions/TransactionStatus.cs
+System.Transactions/Configuration/DefaultSettingsSection.cs
+System.Transactions/Configuration/MachineSettingsSection.cs
+System.Transactions/Configuration/TransactionsSectionGroup.cs
diff --git a/mcs/class/System.Transactions/System.Transactions/Configuration/DefaultSettingsSection.cs b/mcs/class/System.Transactions/System.Transactions/Configuration/DefaultSettingsSection.cs
new file mode 100644
index 000000000000..2992a730c47a
--- /dev/null
+++ b/mcs/class/System.Transactions/System.Transactions/Configuration/DefaultSettingsSection.cs
@@ -0,0 +1,40 @@
+//
+// DefaultSettingsSection.cs
+//
+// Author:
+//	Pablo Ruiz <pruiz@netway.org>
+//
+// (C) 2010 Pablo Ruiz.
+//
+
+#if NET_2_0
+
+using System;
+using System.Collections.Generic;
+using System.Configuration;
+using System.Text;
+
+namespace System.Transactions.Configuration
+{
+	public class DefaultSettingsSection : ConfigurationSection
+	{
+		// http://msdn.microsoft.com/en-us/library/system.transactions.configuration.defaultsettingssection.timeout.aspx
+		[ConfigurationProperty ("timeout", DefaultValue = "00:01:00")]
+		[TimeSpanValidator (MinValueString = "00:00:00", MaxValueString = "10675199.02:48:05.4775807")]
+		public TimeSpan Timeout {
+			get { return (TimeSpan)base["timeout"]; }
+			set {  
+				// FIXME: Validate timespan value
+				base["timeout"] = value;
+			} 
+		}
+
+		// http://msdn.microsoft.com/en-us/library/system.transactions.configuration.defaultsettingssection.distributedtransactionmanagername(v=VS.90).aspx
+		[ConfigurationProperty ("distributedTransactionManagerName", DefaultValue = "")]
+		public string DistributedTransactionManagerName {
+			get { return base["distributedTransactionManagerName"] as string; }
+			set { base["distributedTransactionManagerName"] = value; }
+		}
+	}
+}
+#endif
\ No newline at end of file
diff --git a/mcs/class/System.Transactions/System.Transactions/Configuration/MachineSettingsSection.cs b/mcs/class/System.Transactions/System.Transactions/Configuration/MachineSettingsSection.cs
new file mode 100644
index 000000000000..5de518665fa4
--- /dev/null
+++ b/mcs/class/System.Transactions/System.Transactions/Configuration/MachineSettingsSection.cs
@@ -0,0 +1,33 @@
+//
+// MachineSettingsSection.cs
+//
+// Author:
+//	Pablo Ruiz <pruiz@netway.org>
+//
+// (C) 2010 Pablo Ruiz.
+//
+
+#if NET_2_0
+
+using System;
+using System.Collections.Generic;
+using System.Configuration;
+using System.Text;
+
+namespace System.Transactions.Configuration
+{
+	public class MachineSettingsSection : ConfigurationSection
+	{
+		// http://msdn.microsoft.com/en-us/library/system.transactions.configuration.machinesettingssection.maxtimeout.aspx
+		[ConfigurationProperty("maxTimeout", DefaultValue = "00:10:00")]
+		[TimeSpanValidator(MinValueString = "00:00:00", MaxValueString = "10675199.02:48:05.4775807")]
+		public TimeSpan MaxTimeout {
+			get { return (TimeSpan)base["maxTimeout"]; }
+			set { 
+				// FIXME: Validate timespan value..
+				base["maxTimeout"] = value;
+			}
+		}
+	}
+}
+#endif
\ No newline at end of file
diff --git a/mcs/class/System.Transactions/System.Transactions/Configuration/TransactionsSectionGroup.cs b/mcs/class/System.Transactions/System.Transactions/Configuration/TransactionsSectionGroup.cs
new file mode 100644
index 000000000000..a43d9a99313f
--- /dev/null
+++ b/mcs/class/System.Transactions/System.Transactions/Configuration/TransactionsSectionGroup.cs
@@ -0,0 +1,43 @@
+//
+// TransactionSectionGroup.cs
+//
+// Author:
+//	Pablo Ruiz <pruiz@netway.org>
+//
+// (C) 2010 Pablo Ruiz.
+//
+
+#if NET_2_0
+
+using System;
+using System.Collections.Generic;
+using System.Configuration;
+using System.Text;
+
+namespace System.Transactions.Configuration
+{
+	// http://msdn.microsoft.com/en-us/library/system.transactions.configuration.transactionssectiongroup.aspx
+	public class TransactionsSectionGroup : ConfigurationSectionGroup
+	{
+		public static TransactionsSectionGroup GetSectionGroup(System.Configuration.Configuration config)
+		{
+			if (config == null)
+				throw new ArgumentNullException("config");
+
+			return config.GetSectionGroup("system.transactions") as TransactionsSectionGroup;
+		}
+
+		[ConfigurationProperty("defaultSettings")]
+		public DefaultSettingsSection DefaultSettings
+		{
+			get { return (DefaultSettingsSection)base.Sections["defaultSettings"]; }
+		}
+
+		[ConfigurationProperty("machineSettings")]
+		public MachineSettingsSection MachineSettings
+		{
+			get { return (MachineSettingsSection)base.Sections["machineSettings"]; }
+		}
+	}
+}
+#endif
\ No newline at end of file
diff --git a/mcs/class/System.Transactions/System.Transactions/PreparingEnlistment.cs b/mcs/class/System.Transactions/System.Transactions/PreparingEnlistment.cs
index 407a19325a17..031d840430aa 100644
--- a/mcs/class/System.Transactions/System.Transactions/PreparingEnlistment.cs
+++ b/mcs/class/System.Transactions/System.Transactions/PreparingEnlistment.cs
@@ -20,13 +20,13 @@ public class PreparingEnlistment : Enlistment
 		bool prepared = false;
 		Transaction tx;
 		IEnlistmentNotification enlisted;
-		//WaitHandle waitHandle;
+		WaitHandle waitHandle;
 
 		internal PreparingEnlistment (Transaction tx, IEnlistmentNotification enlisted)
 		{
 			this.tx = tx;
 			this.enlisted = enlisted;
-			//waitHandle = new ManualResetEvent (false);
+			waitHandle = new ManualResetEvent (false);
 		}
 
 		public void ForceRollback ()
@@ -38,16 +38,16 @@ public void ForceRollback ()
 		public void ForceRollback (Exception ex)
 		{
 			tx.Rollback (ex, enlisted);
-			/* See test RMFail2 
-			((ManualResetEvent) waitHandle).Set (); */
+			/* See test RMFail2 */
+			((ManualResetEvent) waitHandle).Set ();
 		}
 
 		[MonoTODO]
 		public void Prepared ()
 		{
 			prepared = true;
-			/* See test RMFail2 
-			((ManualResetEvent) waitHandle).Set ();*/
+			/* See test RMFail2 */
+			((ManualResetEvent) waitHandle).Set ();
 		}
 
 		[MonoTODO]
@@ -60,9 +60,14 @@ internal bool IsPrepared {
 			get { return prepared; }
 		}
 
-		/*internal WaitHandle WaitHandle {
+		internal WaitHandle WaitHandle {
 			get { return waitHandle; }
-		}*/
+		}
+
+		internal IEnlistmentNotification EnlistmentNotification
+		{
+			get { return enlisted; }
+		}
 	}
 }
 
diff --git a/mcs/class/System.Transactions/System.Transactions/Transaction.cs b/mcs/class/System.Transactions/System.Transactions/Transaction.cs
index dc132fb4a045..b4d8b12b3831 100644
--- a/mcs/class/System.Transactions/System.Transactions/Transaction.cs
+++ b/mcs/class/System.Transactions/System.Transactions/Transaction.cs
@@ -232,9 +232,12 @@ public void Rollback (Exception ex)
 		}
 
 		internal void Rollback (Exception ex, IEnlistmentNotification enlisted)
-		{
-			if (aborted)
-				return;
+		{
+			if (aborted)
+			{
+				FireCompleted ();
+				return;
+			}
 
 			/* See test ExplicitTransaction7 */
 			if (info.Status == TransactionStatus.Committed)
@@ -249,7 +252,9 @@ internal void Rollback (Exception ex, IEnlistmentNotification enlisted)
 			if (durables.Count > 0 && durables [0] != enlisted)
 				durables [0].Rollback (e);
 
-			Aborted = true;
+			Aborted = true;
+
+			FireCompleted ();
 		}
 
 		bool Aborted {
@@ -289,7 +294,17 @@ internal void CommitInternal ()
 
 			this.committing = true;
 
-			DoCommit ();		
+			try {
+				DoCommit ();	
+			}
+			catch (TransactionException)
+			{
+				throw;
+			}
+			catch (Exception ex)
+			{
+				throw new TransactionAbortedException("Transaction failed", ex);
+			}
 		}
 		
 		private void DoCommit ()
@@ -299,28 +314,30 @@ private void DoCommit ()
 				/* See test ExplicitTransaction8 */
 				Rollback (null, null);
 				CheckAborted ();
-			}
-
-			if (volatiles.Count == 1 && durables.Count == 0) {
-				/* Special case */
-				ISinglePhaseNotification single = volatiles [0] as ISinglePhaseNotification;
-				if (single != null) {
-					DoSingleCommit (single);
-					Complete ();
-					return;
-				}
-			} 
-
-			if (volatiles.Count > 0)
-				DoPreparePhase ();
-
-			if (durables.Count > 0)
-				DoSingleCommit (durables [0]);
-
-			if (volatiles.Count > 0)
-				DoCommitPhase ();
-
-			Complete ();
+			}
+
+			if (volatiles.Count == 1 && durables.Count == 0)
+			{
+				/* Special case */
+				ISinglePhaseNotification single = volatiles[0] as ISinglePhaseNotification;
+				if (single != null)
+				{
+					DoSingleCommit(single);
+					Complete();
+					return;
+				}
+			}
+
+			if (volatiles.Count > 0)
+				DoPreparePhase();
+
+			if (durables.Count > 0)
+				DoSingleCommit(durables[0]);
+
+			if (volatiles.Count > 0)
+				DoCommitPhase();
+
+			Complete();
 		}
 
 		private void Complete ()
@@ -329,7 +346,9 @@ private void Complete ()
 			committed = true;
 
 			if (!aborted)
-				info.Status = TransactionStatus.Committed;
+				info.Status = TransactionStatus.Committed;
+
+			FireCompleted ();
 		}
 
 		internal void InitScope (TransactionScope scope)
@@ -342,28 +361,40 @@ internal void InitScope (TransactionScope scope)
 				throw new InvalidOperationException ("Commit has already been called on this transaction."); 
 
 			Scope = scope;	
+		}
+
+		static void PrepareCallbackWrapper(object state)
+		{
+			PreparingEnlistment enlist = state as PreparingEnlistment;
+			enlist.EnlistmentNotification.Prepare(enlist);
 		}
 
 		void DoPreparePhase ()
-		{
-			PreparingEnlistment pe;
-			foreach (IEnlistmentNotification enlisted in volatiles) {
-				pe = new PreparingEnlistment (this, enlisted);
-
-				enlisted.Prepare (pe);
-
-				/* FIXME: Where should this timeout value come from? 
-				   current scope?
-				   Wait after all Prepare()'s are sent
-				pe.WaitHandle.WaitOne (new TimeSpan (0,0,5), true); */
-
-				if (!pe.IsPrepared) {
+		{
+			// Call prepare on all volatile managers.
+			foreach (IEnlistmentNotification enlist in volatiles)
+			{
+				PreparingEnlistment pe = new PreparingEnlistment (this, enlist);
+				ThreadPool.QueueUserWorkItem (new WaitCallback(PrepareCallbackWrapper), pe);
+
+				/* Wait (with timeout) for manager to prepare */
+				TimeSpan timeout = Scope != null ? Scope.Timeout : TransactionManager.DefaultTimeout;
+
+				// FIXME: Should we managers in parallel or on-by-one?
+				if (!pe.WaitHandle.WaitOne(timeout, true))
+				{
+					this.Aborted = true;
+					throw new TimeoutException("Transaction timedout");
+				}
+
+				if (!pe.IsPrepared)
+				{
 					/* FIXME: if not prepared & !aborted as yet, then 
-					   this is inDoubt ? . For now, setting aborted = true */
-					Aborted = true;
-					break;
-				}
-			}
+						this is inDoubt ? . For now, setting aborted = true */
+					Aborted = true;
+					break;
+				}
+			}			
 			
 			/* Either InDoubt(tmp) or Prepare failed and
 			   Tx has rolledback */
@@ -393,6 +424,12 @@ void CheckAborted ()
 		{
 			if (aborted)
 				throw new TransactionAbortedException ("Transaction has aborted", innerException);
+		}
+
+		void FireCompleted ()
+		{
+			if (TransactionCompleted != null)
+				TransactionCompleted (this, new TransactionEventArgs(this));
 		}
 
 		static void EnsureIncompleteCurrentScope ()
diff --git a/mcs/class/System.Transactions/System.Transactions/TransactionEventArgs.cs b/mcs/class/System.Transactions/System.Transactions/TransactionEventArgs.cs
index ebcca98870a5..92eea07d1d66 100644
--- a/mcs/class/System.Transactions/System.Transactions/TransactionEventArgs.cs
+++ b/mcs/class/System.Transactions/System.Transactions/TransactionEventArgs.cs
@@ -12,9 +12,21 @@
 namespace System.Transactions
 {
 	public class TransactionEventArgs : EventArgs
-	{
+	{
+		private Transaction transaction;
+
+		public TransactionEventArgs()
+		{
+		}
+
+		internal TransactionEventArgs(Transaction transaction)
+			: this()
+		{
+			this.transaction = transaction;
+		}
+
 		public Transaction Transaction {
-			get { throw new NotImplementedException (); }
+			get { return transaction; }
 		}
 	}
 }
diff --git a/mcs/class/System.Transactions/System.Transactions/TransactionManager.cs b/mcs/class/System.Transactions/System.Transactions/TransactionManager.cs
index 85d12169e10c..a7a62b6388e5 100644
--- a/mcs/class/System.Transactions/System.Transactions/TransactionManager.cs
+++ b/mcs/class/System.Transactions/System.Transactions/TransactionManager.cs
@@ -8,19 +8,38 @@
 // (C)2005 Novell Inc,
 // (C)2006 Novell Inc,
 //
-#if NET_2_0
+#if NET_2_0
+using System.Configuration;
+using System.Transactions.Configuration;
 
 namespace System.Transactions
 {
 	public static class TransactionManager
 	{
-		/* 60 secs */
-		static TimeSpan defaultTimeout = new TimeSpan (0, 1, 0);
-		/* 10 mins */
-		static TimeSpan maxTimeout = new TimeSpan (0, 10, 0);
+		static TransactionManager ()
+		{
+			defaultSettings = ConfigurationManager.GetSection ("system.transactions/defaultSettings") as DefaultSettingsSection;
+			machineSettings = ConfigurationManager.GetSection ("system.transactions/machineSettings") as MachineSettingsSection;
+		}
+
+		static DefaultSettingsSection defaultSettings;
+		static MachineSettingsSection machineSettings;
+		static TimeSpan defaultTimeout = new TimeSpan (0, 1, 0); /* 60 secs */
+		static TimeSpan maxTimeout = new TimeSpan (0, 10, 0); /* 10 mins */
 
-		public static TimeSpan DefaultTimeout {
-			get { return defaultTimeout; }
+		public static TimeSpan DefaultTimeout {
+			get {
+				// Obtain timeout from configuration setting..
+				//		- http://msdn.microsoft.com/en-us/library/ms973865.aspx
+				//		- http://sankarsan.wordpress.com/2009/02/01/transaction-timeout-in-systemtransactions/
+				//	1. sys.txs/defaultSettings[@timeout]
+				//	2. defaultTimeout
+
+				if (defaultSettings != null)
+					return defaultSettings.Timeout;
+
+				return defaultTimeout; 
+			}
 		}
 
 		[MonoTODO ("Not implemented")]
@@ -30,7 +49,13 @@ public static HostCurrentTransactionCallback HostCurrentCallback {
 		}
 
 		public static TimeSpan MaximumTimeout {
-			get { return maxTimeout; }
+			get {
+
+				if (machineSettings != null)
+					return machineSettings.MaxTimeout;
+
+				return maxTimeout; 
+			}
 		}
 
 		[MonoTODO ("Not implemented")]
diff --git a/mcs/class/System.Transactions/System.Transactions/TransactionScope.cs b/mcs/class/System.Transactions/System.Transactions/TransactionScope.cs
index ca5b5822e24b..d6138bee2846 100644
--- a/mcs/class/System.Transactions/System.Transactions/TransactionScope.cs
+++ b/mcs/class/System.Transactions/System.Transactions/TransactionScope.cs
@@ -22,7 +22,8 @@ public sealed class TransactionScope : IDisposable
 
 		Transaction transaction;
 		Transaction oldTransaction;
-		TransactionScope parentScope;
+		TransactionScope parentScope;
+		TimeSpan timeout;
 
 		/* Num of non-disposed nested scopes */
 		int nested;
@@ -90,7 +91,8 @@ void Initialize (TransactionScopeOption scopeOption,
 		{
 			completed = false;
 			isRoot = false;
-			nested = 0;
+			nested = 0;
+			this.timeout = timeout;
 
 			oldTransaction = Transaction.CurrentInternal;
 
@@ -139,6 +141,11 @@ public void Complete ()
 
 		internal bool IsComplete {
 			get { return completed; }
+		}
+
+		internal TimeSpan Timeout
+		{
+			get { return timeout; }
 		}
 
 		public void Dispose ()
diff --git a/mcs/class/System.Transactions/Test/EnlistTest.cs b/mcs/class/System.Transactions/Test/EnlistTest.cs
index 1342f2f7c072..9d820c18b852 100644
--- a/mcs/class/System.Transactions/Test/EnlistTest.cs
+++ b/mcs/class/System.Transactions/Test/EnlistTest.cs
@@ -257,7 +257,8 @@ public void Vol2_Dur1_Fail1 ()
 		[Test]
 		[Ignore ( "Correct this test, it should throw TimeOutException or something" )]
 		public void Vol2_Dur1_Fail2 ()
-		{
+		{
+			TransactionAbortedException exception = null;
 			IntResourceManager [] irm = new IntResourceManager [4];
 			irm [0] = new IntResourceManager (1);
 			irm [1] = new IntResourceManager (3);
@@ -282,13 +283,67 @@ public void Vol2_Dur1_Fail2 ()
 					scope.Complete ();
 				}
 			}
-			catch (TransactionAbortedException) {
+			catch (TransactionAbortedException ex) {
 				irm [0].CheckSPC ( "irm [0]" );
 
 				/* Volatile RMs get 2PC Prepare, and then get rolled back */
 				for (int i = 1; i < 4; i++)
-					irm [i].Check ( 0, 1, 0, 1, 0, "irm [" + i + "]" );
-			}
+					irm [i].Check ( 0, 1, 0, 1, 0, "irm [" + i + "]" );
+
+				exception = ex;
+			}
+
+			Assert.IsNotNull(exception, "Expected TransactionAbortedException not thrown!");
+			Assert.IsNotNull(exception.InnerException, "TransactionAbortedException has no inner exception!");
+			Assert.AreEqual(typeof(TimeoutException), exception.InnerException.GetType());
+		}
+
+		/* Same as Vol2_Dur1_Fail2, but with a volatile manager timming out */
+		[Test]
+		[Ignore ( "Correct this test, it should throw TimeOutException or something" )]
+		public void Vol2_Dur1_Fail2b()
+		{
+			TransactionAbortedException exception = null;
+			IntResourceManager[] irm = new IntResourceManager[4];
+			irm[0] = new IntResourceManager(1);
+			irm[1] = new IntResourceManager(3);
+			irm[2] = new IntResourceManager(5);
+			irm[3] = new IntResourceManager(7);
+
+			irm[0].IgnoreSPC = true;
+			irm[1].Volatile = false;
+
+			for (int i = 0; i < 4; i++)
+				irm[i].UseSingle = true;
+
+			/* Durable RM irm[2] does on SPC, so
+			 * all volatile RMs get Rollback */
+			try
+			{
+				using (TransactionScope scope = new TransactionScope(TransactionScopeOption.Required, new TimeSpan(0, 0, 5)))
+				{
+					irm[0].Value = 2;
+					irm[1].Value = 6;
+					irm[2].Value = 10;
+					irm[3].Value = 14;
+
+					scope.Complete();
+				}
+			}
+			catch (TransactionAbortedException ex)
+			{
+				irm[0].CheckSPC("irm [0]");
+
+				/* Volatile RMs get 2PC Prepare, and then get rolled back */
+				for (int i = 1; i < 4; i++)
+					irm[i].Check(0, 1, 0, 1, 0, "irm [" + i + "]");
+
+				exception = ex;
+			}
+
+			Assert.IsNotNull(exception, "Expected TransactionAbortedException not thrown!");
+			Assert.IsNotNull(exception.InnerException, "TransactionAbortedException has no inner exception!");
+			Assert.AreEqual(typeof(TimeoutException), exception.InnerException.GetType());
 		}
 
 		/* >1vol + 1 durable
@@ -499,8 +554,35 @@ public void TransactionDispose3 ()
 
 			irm.Check (1, 1, 0, 0, "Dispose transaction");
 			Assert.AreEqual (5, irm.Value);
+		}
+
+		[Test]
+		public void TransactionCompleted_Committed ()
+		{
+			bool called = false;
+			using (var ts = new TransactionScope ())
+			{
+				var tr = Transaction.Current;
+				tr.TransactionCompleted += (s, e) => called = true;
+				ts.Complete ();
+			}
+
+			Assert.IsTrue (called, "TransactionCompleted event handler not called!");
+		}
+
+		[Test]
+		public void TransactionCompleted_Rollback ()
+		{
+			bool called = false;
+			using (var ts = new TransactionScope ())
+			{
+				var tr = Transaction.Current;
+				tr.TransactionCompleted += (s, e) => called = true;
+				// Not calling ts.Complete() on purpose..
+			}
+
+			Assert.IsTrue (called, "TransactionCompleted event handler not called!");
 		}
-
 		#endregion
 
 	}
diff --git a/mcs/class/System.Transactions/Test/TransactionScopeTest.cs b/mcs/class/System.Transactions/Test/TransactionScopeTest.cs
index 3e29a639077b..25d812ed90c0 100644
--- a/mcs/class/System.Transactions/Test/TransactionScopeTest.cs
+++ b/mcs/class/System.Transactions/Test/TransactionScopeTest.cs
@@ -454,8 +454,6 @@ public void RMFail1 ()
 		}
 
 		[Test]
-		[Category("NotWorking")]
-		[Ignore("NotWorking")]
 		public void RMFail2 ()
 		{
 			IntResourceManager irm = new IntResourceManager (1);