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diff --git a/esphomeyaml/components/sensor/rotary_encoder.rst b/esphomeyaml/components/sensor/rotary_encoder.rst
new file mode 100644
index 000000000..afa3c831b
--- /dev/null
+++ b/esphomeyaml/components/sensor/rotary_encoder.rst
@@ -0,0 +1,70 @@
+Rotary Encoder Sensor
+=====================
+
+The ``rotary_encoder`` sensor platform allows you to use any continuous-rotation
+rotary encoders with esphomeyaml. These devices usually have two pins with which
+they encode the rotation. Every time the knob of the rotary encoder is turned, the
+signals of the two pins go HIGH and LOW in turn. See
+`this Arduino article <https://playground.arduino.cc/Main/RotaryEncoders>`__ to gain
+a better understanding of these sensors.
+
+.. figure:: /esphomeyaml/components/sensor/images/rotary_encoder-full.jpg
+    :align: center
+    :width: 75.0%
+
+    Example of a continuous rotary encoder. Pin ``+`` is connected to ``3.3V``,
+    ``GND`` is connected to ``GND``, and ``CLK`` & ``DT`` are A & B.
+
+.. figure:: /esphomeyaml/components/sensor/images/rotary_encoder-ui.png
+    :align: center
+    :width: 75.0%
+
+To use rotary encoders in esphomeyaml, first identify the two pins encoding th step value.
+These are often called ``CLK`` and ``DT`` as in above image. Note if the values this sensor
+outputs go in the wrong direction, you can just swap these two pins.
+
+.. code:: yaml
+
+    # Example configuration entry
+    sensor:
+      - platform: rotary_encoder
+        name: "Rotary Encoder"
+        pin_a: D1
+        pin_b: D2
+
+Configuration variables:
+~~~~~~~~~~~~~~~~~~~~~~~~
+
+-  **pin_a** (**Required**, `Pin Schema </esphomeyaml/configuration-types.html#pin-schema>`__):
+   The first pin for determining the step value. Must not be a pin from an external I/O expander.
+-  **pin_b** (**Required**, `Pin Schema </esphomeyaml/configuration-types.html#pin-schema>`__):
+   The second pin for determining the step value. Must not be a pin from an external I/O expander.
+-  **name** (**Required**, string): The name of the rotary encoder sensor.
+-  **pin_reset** (*Optional*, `Pin Schema </esphomeyaml/configuration-types.html#pin-schema>`__):
+   An optional pin that resets the step value. This is useful with rotary encoders that have have a
+   third pin. Defaults to no reset pin.
+-  **id** (*Optional*,
+   `id </esphomeyaml/configuration-types.html#id>`__): Manually specify
+   the ID used for code generation.
+-  All other options from
+   `Sensor </esphomeyaml/components/sensor/index.html#base-sensor-configuration>`__
+   and `MQTT
+   Component </esphomeyaml/components/mqtt.html#mqtt-component-base-configuration>`__.
+
+Throttling Output
+~~~~~~~~~~~~~~~~~
+
+This sensor can output a lot of values in a short period of time when turning the knob.
+In order to not put too much stress on your network connection, you can leverage esphomelib's
+sensor filters. The following will only send out values once every half second max:
+
+.. code:: yaml
+
+    # Example configuration entry
+    sensor:
+      - platform: rotary_encoder
+        name: "Rotary Encoder"
+        pin_a: D1
+        pin_b: D2
+        filters:
+          - throttle: 0.5s
diff --git a/esphomeyaml/images/rotary_encoder.jpg b/esphomeyaml/images/rotary_encoder.jpg
new file mode 100644
index 000000000..68e6f5e27
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diff --git a/esphomeyaml/index.rst b/esphomeyaml/index.rst
index 13b7b87ea..2ab5a74d6 100644
--- a/esphomeyaml/index.rst
+++ b/esphomeyaml/index.rst
@@ -131,9 +131,9 @@ Sensor Components
 ----------------------  ----------------------  ----------------------
 `BME280`_               `BME680`_               `TSL2561`_
 ----------------------  ----------------------  ----------------------
-|SHT3X-D|_              |DHT12|_
+|SHT3X-D|_              |DHT12|_                |Rotary Encoder|_
 ----------------------  ----------------------  ----------------------
-`SHT3X-D`_              `DHT12`_
+`SHT3X-D`_              `DHT12`_                `Rotary Encoder`_
 ======================  ======================  ======================
 
 .. |Sensor Core| image:: /esphomeyaml/images/folder-open.svg
@@ -204,6 +204,10 @@ Sensor Components
     :class: component-image
 .. _DHT12: /esphomeyaml/components/sensor/dht12.html
 
+.. |Rotary Encoder| image:: /esphomeyaml/images/rotary_encoder.jpg
+    :class: component-image
+.. _Rotary Encoder: /esphomeyaml/components/sensor/rotary_encoder.html
+
 
 Binary Sensor Components
 ~~~~~~~~~~~~~~~~~~~~~~~~
@@ -498,4 +502,5 @@ Full Index
     components/sensor/tsl2561.rst
     components/sensor/sht3xd.rst
     components/sensor/dht12.rst
+    components/sensor/rotary_encoder.rst
     using-with/sonoff-s20.rst