diff --git a/railties/lib/rails/commands/console/irb_console.rb b/railties/lib/rails/commands/console/irb_console.rb
index b7854bf4364..14c7cf908e3 100644
--- a/railties/lib/rails/commands/console/irb_console.rb
+++ b/railties/lib/rails/commands/console/irb_console.rb
@@ -90,7 +90,8 @@ module Rails
 
         env = colorized_env
         app_name = @app.class.module_parent_name.underscore.dasherize
-        prompt_prefix = "#{app_name}(#{env})"
+        prompt_prefix = "%N(#{env})"
+        IRB.conf[:IRB_NAME] = app_name
 
         IRB.conf[:PROMPT][:RAILS_PROMPT] = {
           PROMPT_I: "#{prompt_prefix}> ",
diff --git a/railties/test/application/console_test.rb b/railties/test/application/console_test.rb
index ed2b227f0a5..75519032f92 100644
--- a/railties/test/application/console_test.rb
+++ b/railties/test/application/console_test.rb
@@ -110,6 +110,22 @@ class FullStackConsoleTest < ActiveSupport::TestCase
     @primary.puts "quit"
   end
 
+  def test_prompt_is_properly_set
+    options = "-e test"
+    spawn_console(options)
+
+    write_prompt "a = 1", "a = 1", prompt: "app-template(test)>"
+  end
+
+  def test_prompt_allows_changing_irb_name
+    options = "-e test"
+    spawn_console(options)
+
+    write_prompt "conf.irb_name = 'foo'"
+    write_prompt "a = 1", "a = 1", prompt: "foo(test)>"
+    @primary.puts "quit"
+  end
+
   def test_environment_option_and_irb_option
     options = "-e test -- --verbose"
     spawn_console(options)