diff --git a/kotlinx-coroutines-rx/src/main/kotlin/asyncRxIterator.kt b/kotlinx-coroutines-rx/src/main/kotlin/asyncRxIterator.kt
new file mode 100644
index 0000000000..ce4020f1c1
--- /dev/null
+++ b/kotlinx-coroutines-rx/src/main/kotlin/asyncRxIterator.kt
@@ -0,0 +1,134 @@
+package kotlinx.coroutines
+
+import rx.Observable
+import rx.Subscriber
+import java.util.concurrent.atomic.AtomicReferenceFieldUpdater
+import kotlin.coroutines.Continuation
+import kotlin.coroutines.CoroutineIntrinsics
+
+/**
+ * Suspending iteration extension. It does not have its own buffer and works by arranging rendezvous between
+ * producer and consumer. It applies back-pressure to the producer as needed. If iterating coroutine does not have a
+ * dispatcher with its own thread, then the iterating coroutine is resumed and works in the thread that governs
+ * producer observable.
+ */
+public suspend operator fun <V : Any> Observable<V>.iterator(): ObservableIterator<V> {
+    val iterator = ObservableIterator<V>()
+    subscribe(iterator)
+    return iterator
+}
+
+private sealed class Waiter<in T>(val c: Continuation<T>)
+private class HasNextWaiter(c: Continuation<Boolean>) : Waiter<Boolean>(c)
+private class NextWaiter<V>(c: Continuation<V>) : Waiter<V>(c)
+
+private object Completed
+private class CompletedWith(val v: Any)
+private class Error(val e: Throwable)
+
+public class ObservableIterator<V : Any> : Subscriber<V>() {
+    // Contains either null, Completed, CompletedWith, Error(exception), Waiter, or next value
+    @Volatile
+    private var rendezvous: Any? = null
+
+    companion object {
+        private val RENDEZVOUS_UPDATER = AtomicReferenceFieldUpdater
+            .newUpdater(ObservableIterator::class.java, Any::class.java, "rendezvous")
+    }
+
+    private fun cas(expect: Any?, update: Any?) = RENDEZVOUS_UPDATER.compareAndSet(this, expect, update)
+
+    @Suppress("UNCHECKED_CAST")
+    public suspend operator fun hasNext(): Boolean = CoroutineIntrinsics.suspendCoroutineOrReturn sc@ { c ->
+        while (true) { // lock-free loop for rendezvous
+            val cur = rendezvous
+            when (cur) {
+                null -> if (cas(null, HasNextWaiter(c))) return@sc CoroutineIntrinsics.SUSPENDED
+                Completed -> return@sc false
+                is CompletedWith -> return@sc true
+                is Error -> throw cur.e
+                is Waiter<*> -> throw IllegalStateException("Concurrent iteration")
+                else -> return@sc true
+            }
+        }
+    }
+
+    @Suppress("UNCHECKED_CAST")
+    public suspend operator fun next(): V = CoroutineIntrinsics.suspendCoroutineOrReturn sc@ { c ->
+        while (true) { // lock-free loop for rendezvous
+            val cur = rendezvous
+            when (cur) {
+                null -> if (cas(null, NextWaiter(c))) return@sc CoroutineIntrinsics.SUSPENDED
+                Completed -> throw NoSuchElementException()
+                is CompletedWith -> if (cas(cur, Completed)) return@sc cur.v as V
+                is Error -> throw cur.e
+                is Waiter<*> -> throw IllegalStateException("Concurrent iteration")
+                else -> if (cas(cur, null)) return (cur as V).apply { request(1) }
+            }
+        }
+    }
+
+    public override fun onStart() {
+        request(1)
+    }
+
+    public override fun onError(e: Throwable) {
+        while (true) { // lock-free loop for rendezvous
+            val cur = rendezvous
+            when (cur) {
+                null ->  if (cas(null, Error(e))) return
+                Completed -> throw IllegalStateException("onError after onCompleted")
+                is CompletedWith -> throw IllegalStateException("onError after onCompleted")
+                is Error -> throw IllegalStateException("onError after onError")
+                is Waiter<*> -> if (cas(cur, null)) {
+                    cur.c.resumeWithException(e)
+                    return
+                }
+                else -> throw IllegalStateException("onError after onNext before request(1) was called")
+            }
+        }
+    }
+
+    @Suppress("UNCHECKED_CAST")
+    public override fun onNext(v: V) {
+        while (true) { // lock-free loop for rendezvous
+            val cur = rendezvous
+            when (cur) {
+                null ->  if (cas(null, v)) return
+                Completed -> throw IllegalStateException("onNext after onCompleted")
+                is CompletedWith -> throw IllegalStateException("onNext after onCompleted")
+                is Error -> throw IllegalStateException("onNext after onError")
+                is HasNextWaiter -> if (cas(cur, v)) {
+                    cur.c.resume(true)
+                    return
+                }
+                is NextWaiter<*> -> if (cas(cur, null)) {
+                    (cur as NextWaiter<V>).c.resume(v)
+                    return
+                }
+                else -> throw IllegalStateException("onNext after onNext before request(1) was called")
+            }
+        }
+    }
+
+    public override fun onCompleted() {
+        while (true) { // lock-free loop for rendezvous
+            val cur = rendezvous
+            when (cur) {
+                null ->  if (cas(null, Completed)) return
+                Completed -> throw IllegalStateException("onCompleted after onCompleted")
+                is CompletedWith -> throw IllegalStateException("onCompleted after onCompleted")
+                is Error -> throw IllegalStateException("onCompleted after onError")
+                is HasNextWaiter -> if (cas(cur, Completed)) {
+                    cur.c.resume(false)
+                    return
+                }
+                is NextWaiter<*> -> if (cas(cur, Completed)) {
+                    cur.c.resumeWithException(NoSuchElementException())
+                    return
+                }
+                else -> if (cas(cur, CompletedWith(cur))) return
+            }
+        }
+    }
+}
diff --git a/kotlinx-coroutines-rx/src/test/kotlin/AsyncRxTest.kt b/kotlinx-coroutines-rx/src/test/kotlin/AsyncRxTest.kt
index c9677a567b..05d5b4d49e 100644
--- a/kotlinx-coroutines-rx/src/test/kotlin/AsyncRxTest.kt
+++ b/kotlinx-coroutines-rx/src/test/kotlin/AsyncRxTest.kt
@@ -126,6 +126,38 @@ class AsyncRxTest {
         }
     }
 
+
+    @Test
+    fun testAsyncIterator() {
+        val observable = asyncRx {
+            var result = ""
+            for (s in Observable.just("O", "K")) {
+                result += s
+            }
+            result
+        }
+
+        checkObservableWithSingleValue(observable) {
+            assertEquals("OK", it)
+        }
+    }
+
+    @Test
+    fun testAsyncIteratorException() {
+        val observable = asyncRx {
+            var result = ""
+            for (s in Observable.error<String>(RuntimeException("OK"))) {
+                result += s
+            }
+            result
+        }
+
+        checkErroneousObservable(observable) {
+            assert(it is RuntimeException)
+            assertEquals("OK", it.message)
+        }
+    }
+
     private fun checkErroneousObservable(
             observable: Observable<*>,
             checker: (Throwable) -> Unit