diff --git a/src/components/datepicker/demoNgModelOptionsTimezone (setUTCHours to 23)/index.html b/src/components/datepicker/demoNgModelOptionsTimezone (setUTCHours to 23)/index.html
new file mode 100644
index 0000000000..a800537de9
--- /dev/null
+++ b/src/components/datepicker/demoNgModelOptionsTimezone (setUTCHours to 23)/index.html	
@@ -0,0 +1,32 @@
+<md-content ng-controller="AppCtrl as ctrl" layout="row" layout-padding ng-cloak>
+  <md-calendar ng-model="ctrl.calendarDate" ng-model-options="{timezone: 'UTC'}">
+  </md-calendar>
+
+  <div layout="column" layout-padding>
+    <div>
+      <h4>Calendar Values</h4>
+      <div>
+        <strong>Date in local timezone:</strong>
+        {{ctrl.calendarDate|date:"yyyy-MM-dd HH:mm Z"}}
+      </div>
+      <div>
+        <strong>Date in UTC timezone:</strong>
+        {{ctrl.calendarDate|date:"yyyy-MM-dd HH:mm Z":"UTC"}}
+      </div>
+    </div>
+    <md-divider></md-divider>
+    <md-datepicker ng-model="ctrl.datepickerDate" ng-model-options="{timezone: 'UTC'}">
+    </md-datepicker>
+    <div>
+      <h4>Datepicker Values</h4>
+      <div>
+        <strong>Date in local timezone:</strong>
+        {{ctrl.datepickerDate|date:"yyyy-MM-dd HH:mm Z"}}
+      </div>
+      <div>
+        <strong>Date in UTC timezone:</strong>
+        {{ctrl.datepickerDate|date:"yyyy-MM-dd HH:mm Z":"UTC"}}
+      </div>
+    </div>
+  </div>
+</md-content>
diff --git a/src/components/datepicker/demoNgModelOptionsTimezone (setUTCHours to 23)/script.js b/src/components/datepicker/demoNgModelOptionsTimezone (setUTCHours to 23)/script.js
new file mode 100644
index 0000000000..2f9f7e0799
--- /dev/null
+++ b/src/components/datepicker/demoNgModelOptionsTimezone (setUTCHours to 23)/script.js	
@@ -0,0 +1,14 @@
+angular.module('ngModelTimezoneUsage', ['ngMaterial', 'ngMessages'])
+.controller('AppCtrl', function() {
+  this.datepickerDate = new Date(0);
+  this.datepickerDate.setUTCFullYear(2020, 5, 19);
+
+  // represents isssue: https://github.com/angular/material/issues/12149 , when input box initial values do not takes into account passed timezone option.
+  this.datepickerDate.setUTCHours(23, 0, 0, 0);
+
+  this.calendarDate = new Date(0);
+  this.calendarDate.setUTCFullYear(2020, 5, 19);
+
+  // represents isssue: https://github.com/angular/material/issues/12149 , when input box initial values do not takes into account passed timezone option.
+  this.datepickerDate.setUTCHours(23, 0, 0, 0);
+});
diff --git a/src/components/datepicker/js/calendar.js b/src/components/datepicker/js/calendar.js
index b30ae1d5d8..d080182388 100644
--- a/src/components/datepicker/js/calendar.js
+++ b/src/components/datepicker/js/calendar.js
@@ -364,11 +364,23 @@
   CalendarCtrl.prototype.setNgModelValue = function(date) {
     var timezone = this.$mdUtil.getModelOption(this.ngModelCtrl, 'timezone');
     var value = this.dateUtil.createDateAtMidnight(date);
+
+    if (timezone != null && timezone != "") {
+      // If timezone is specified - then convert to midnight of specified timezone to display
+      var offset = value.getTimezoneOffset();
+      if (offset < 0) {
+        // Convert negative offset to positive
+        value.setMinutes(-1*(offset), 0, 0);
+      }
+      else {
+        value.setMinutes(offset, 0, 0);
+      }
+    }
+
     this.focusDate(value);
     this.$scope.$emit('md-calendar-change', value);
-    // Using the timezone when the offset is negative (GMT+X) causes the previous day to be
-    // selected here. This check avoids that.
-    if (timezone == null || value.getTimezoneOffset() < 0) {
+
+    if (timezone == null || timezone == "") {
       this.ngModelCtrl.$setViewValue(this.ngDateFilter(value, 'yyyy-MM-dd'), 'default');
     } else {
       this.ngModelCtrl.$setViewValue(this.ngDateFilter(value, 'yyyy-MM-dd', timezone), 'default');