diff --git a/src/dev-app/menu/menu-demo.ts b/src/dev-app/menu/menu-demo.ts
index 20e3fee415a6..66db0c5efadb 100644
--- a/src/dev-app/menu/menu-demo.ts
+++ b/src/dev-app/menu/menu-demo.ts
@@ -19,13 +19,13 @@ export class MenuDemo {
   selected = '';
   items = [
     {text: 'Refresh'},
-    {text: 'Settings'},
+    {text: 'Settings with a longer name so we can test text wrapping'},
     {text: 'Help', disabled: true},
     {text: 'Sign Out'}
   ];
 
   iconItems = [
-    {text: 'Redial', icon: 'dialpad'},
+    {text: 'Redial with a longer name so we can test text wrapping', icon: 'dialpad'},
     {text: 'Check voicemail', icon: 'voicemail', disabled: true},
     {text: 'Disable alerts', icon: 'notifications_off'}
   ];
diff --git a/src/lib/core/option/option.scss b/src/lib/core/option/option.scss
index d1d03547dc37..003cab1a1fc5 100644
--- a/src/lib/core/option/option.scss
+++ b/src/lib/core/option/option.scss
@@ -11,7 +11,6 @@
   display: flex;
   flex-direction: row;
   max-width: 100%;
-  box-sizing: border-box;
   align-items: center;
   -webkit-tap-highlight-color: transparent;
 
diff --git a/src/lib/core/style/_menu-common.scss b/src/lib/core/style/_menu-common.scss
index a7159051fbc0..80ea8faeb70b 100644
--- a/src/lib/core/style/_menu-common.scss
+++ b/src/lib/core/style/_menu-common.scss
@@ -28,6 +28,7 @@ $mat-menu-icon-margin: 16px !default;
   line-height: $mat-menu-item-height;
   height: $mat-menu-item-height;
   padding: 0 $mat-menu-side-padding;
+  box-sizing: border-box;
 
   text-align: left;
   text-decoration: none;   // necessary to reset anchor tags
diff --git a/src/lib/menu/menu.scss b/src/lib/menu/menu.scss
index 162407665f75..9dd0d3d19404 100644
--- a/src/lib/menu/menu.scss
+++ b/src/lib/menu/menu.scss
@@ -5,6 +5,7 @@
 @import '../../cdk/a11y/a11y';
 
 $mat-menu-vertical-padding: 8px !default;
+$mat-menu-item-vertical-padding: 8px !default;
 $mat-menu-border-radius: 4px !default;
 $mat-menu-submenu-indicator-size: 10px !default;
 
@@ -30,6 +31,17 @@ $mat-menu-submenu-indicator-size: 10px !default;
   @include mat-menu-item-base();
   position: relative;
 
+  // TODO(crisbeto): most of these can be moved into the `mat-menu-item-base`
+  // once we start allowing text wrapping in mat-select and mat-autocomplete.
+  display: flex;
+  align-items: center;
+  white-space: normal;
+  line-height: normal;
+  height: auto;
+  min-height: $mat-menu-item-height;
+  padding-top: $mat-menu-item-vertical-padding;
+  padding-bottom: $mat-menu-item-vertical-padding;
+
   @include cdk-high-contrast {
     &.cdk-program-focused,
     &.cdk-keyboard-focused,