diff --git a/res/layout/account_setup_credentials_fragment.xml b/res/layout/account_setup_credentials_fragment.xml
index d3e2e7c7f..0003ff17c 100644
--- a/res/layout/account_setup_credentials_fragment.xml
+++ b/res/layout/account_setup_credentials_fragment.xml
@@ -20,6 +20,42 @@
         android:layout_weight="1"
         android:orientation="vertical">
 
+    <TextView
+        android:id="@+id/wrong_password_warning_label"
+        android:layout_width="match_parent"
+        android:layout_height="wrap_content"
+        android:visibility="gone"
+        android:paddingTop="16dip"
+        android:paddingBottom="16dip"
+        android:text="@string/password_warning_label"
+        android:textColor="@color/password_warning_color"/>
+
+    <TextView
+        android:id="@+id/email_confirmation_label"
+        android:layout_width="match_parent"
+        android:layout_height="wrap_content"
+        android:visibility="gone"
+        android:textStyle="bold"
+        android:text="@string/email_confirmation_label"
+        android:textColor="@color/email_confirmation_color"/>
+
+    <TextView
+        android:id="@+id/email_confirmation"
+        android:layout_width="match_parent"
+        android:layout_height="wrap_content"
+        android:visibility="gone"
+        android:paddingBottom="24dip"
+        android:textColor="@color/email_confirmation_color"/>
+
+    <EditText
+        android:id="@+id/regular_password"
+        android:layout_height="wrap_content"
+        android:layout_width="match_parent"
+        android:hint="@string/account_setup_incoming_password_label"
+        android:inputType="textPassword"
+        android:imeOptions="actionDone"
+        android:visibility="gone"/>
+
     <LinearLayout
             android:id="@+id/oauth_group"
             android:layout_width="match_parent"
@@ -47,7 +83,7 @@
                 android:hint="@string/account_setup_incoming_password_label"
                 android:layout_gravity="center"
                 android:inputType="textPassword"
-                android:imeOptions="actionNext"/>
+                android:imeOptions="actionDone"/>
     </LinearLayout>
 
     <EditText
diff --git a/res/values/colors.xml b/res/values/colors.xml
index b15fb6590..458dab829 100644
--- a/res/values/colors.xml
+++ b/res/values/colors.xml
@@ -39,4 +39,8 @@
 
     <color name="button_text_color">#777777</color>
     <color name="button_text_disabled_color">#cccccc</color>
+
+    <color name="password_warning_color">#FFA500</color>
+    <color name="email_confirmation_color">#808080</color>
+
 </resources>
\ No newline at end of file
diff --git a/res/values/strings.xml b/res/values/strings.xml
index a8ee98ceb..1f04c0807 100644
--- a/res/values/strings.xml
+++ b/res/values/strings.xml
@@ -194,6 +194,11 @@
     <string name="oauth_authentication_title">Requesting authorization</string>
     <!-- Title of screen to choose with authentication to use -->
     <string name="sign_in_title">Sign in</string>
+
+    <!-- Warning label displayed when the email address or password are incorrect -->
+    <string name="password_warning_label">Email address or password are incorrect</string>
+    <!-- Label displayed to confirm what email address we are trying to validate -->
+    <string name="email_confirmation_label">Email address:</string>
     <!-- Headline of screen when setting up new email account (large text over divider)
         [CHAR LIMIT=none] -->
     <string name="account_setup_basics_headline">Email account</string>
@@ -207,7 +212,8 @@
     <string name="or_label">OR</string>
     <!-- Label for signing in with Google using OAuth -->
     <string name="sign_in_with_google">Sign in with Google</string>
-
+    <!-- On "Set up email" screen, hint for account email password text field -->
+    <string name="account_setup_basics_password_label">Password</string>
     <!-- hint for account email password text field -->
     <string name="password_label">Password</string>
     <!--  On the "Setup up email" screen, label indicating what service we are signed in with [CHAR LIMIT=40] -->
diff --git a/src/com/android/email/activity/setup/AccountCredentials.java b/src/com/android/email/activity/setup/AccountCredentials.java
index 9b2b43cd3..41e4d5374 100644
--- a/src/com/android/email/activity/setup/AccountCredentials.java
+++ b/src/com/android/email/activity/setup/AccountCredentials.java
@@ -36,7 +36,7 @@ public class AccountCredentials extends Activity
         final String protocol = getIntent().getStringExtra(EXTRA_PROTOCOL);
 
         final AccountSetupCredentialsFragment f =
-                AccountSetupCredentialsFragment.newInstance(emailAddress, protocol);
+                AccountSetupCredentialsFragment.newInstance(emailAddress, protocol, false);
         getFragmentManager().beginTransaction()
                 .add(R.id.account_credentials_fragment_container, f, CREDENTIALS_FRAGMENT_TAG)
                 .commit();
diff --git a/src/com/android/email/activity/setup/AccountSetupCredentialsFragment.java b/src/com/android/email/activity/setup/AccountSetupCredentialsFragment.java
index 4b4e57292..3a54b45b1 100644
--- a/src/com/android/email/activity/setup/AccountSetupCredentialsFragment.java
+++ b/src/com/android/email/activity/setup/AccountSetupCredentialsFragment.java
@@ -24,10 +24,12 @@ import android.text.Editable;
 import android.text.TextUtils;
 import android.text.TextWatcher;
 import android.text.format.DateUtils;
+import android.view.KeyEvent;
 import android.view.LayoutInflater;
 import android.view.View;
 import android.view.View.OnClickListener;
 import android.view.ViewGroup;
+import android.view.inputmethod.EditorInfo;
 import android.widget.EditText;
 import android.widget.TextView;
 
@@ -54,6 +56,7 @@ public class AccountSetupCredentialsFragment extends AccountSetupFragment
 
     private static final String EXTRA_EMAIL = "email";
     private static final String EXTRA_PROTOCOL = "protocol";
+    private static final String EXTRA_PASSWORD_FAILED = "password_failed";
 
     public static final String EXTRA_PASSWORD = "password";
     public static final String EXTRA_OAUTH_PROVIDER = "provider";
@@ -66,6 +69,10 @@ public class AccountSetupCredentialsFragment extends AccountSetupFragment
     private EditText mImapPasswordText;
     private EditText mRegularPasswordText;
     private TextWatcher mValidationTextWatcher;
+    private TextView mPasswordWarningLabel;
+    private TextView mEmailConfirmationLabel;
+    private TextView mEmailConfirmation;
+    private TextView.OnEditorActionListener mEditorActionListener;
     private String mEmailAddress;
     private boolean mOfferOAuth;
     private boolean mOfferCerts;
@@ -87,11 +94,12 @@ public class AccountSetupCredentialsFragment extends AccountSetupFragment
      * @return new fragment instance
      */
     public static AccountSetupCredentialsFragment newInstance(final String email,
-            final String protocol) {
+            final String protocol, final boolean passwordFailed) {
         final AccountSetupCredentialsFragment f = new AccountSetupCredentialsFragment();
         final Bundle b = new Bundle(2);
         b.putString(EXTRA_EMAIL, email);
         b.putString(EXTRA_PROTOCOL, protocol);
+        b.putBoolean(EXTRA_PASSWORD_FAILED, passwordFailed);
         f.setArguments(b);
         return f;
     }
@@ -111,6 +119,29 @@ public class AccountSetupCredentialsFragment extends AccountSetupFragment
         mDeviceIdSection = UiUtilities.getView(view, R.id.device_id_section);
         mDeviceId = UiUtilities.getView(view, R.id.device_id);
         mClientCertificateSelector.setHostCallback(this);
+        mPasswordWarningLabel  = UiUtilities.getView(view, R.id.wrong_password_warning_label);
+        mEmailConfirmationLabel  = UiUtilities.getView(view, R.id.email_confirmation_label);
+        mEmailConfirmation  = UiUtilities.getView(view, R.id.email_confirmation);
+
+        mEditorActionListener = new TextView.OnEditorActionListener() {
+            @Override
+            public boolean onEditorAction(TextView view, int actionId, KeyEvent event) {
+                if (actionId == EditorInfo.IME_ACTION_DONE) {
+                    final Callback callback = (Callback) getActivity();
+                    if (callback != null) {
+                        final Bundle results = new Bundle(1);
+                        results.putString(EXTRA_PASSWORD, getPassword());
+                        mResults = results;
+                        callback.onCredentialsComplete(results);
+                    }
+                    return true;
+                } else {
+                    return false;
+                }
+            }
+        };
+        mImapPasswordText.setOnEditorActionListener(mEditorActionListener);
+        mRegularPasswordText.setOnEditorActionListener(mEditorActionListener);
 
         // After any text edits, call validateFields() which enables or disables the Next button
         mValidationTextWatcher = new TextWatcher() {
@@ -166,6 +197,8 @@ public class AccountSetupCredentialsFragment extends AccountSetupFragment
             }
             mDeviceId.setText(deviceId);
         }
+        final boolean passwordFailed = getArguments().getBoolean(EXTRA_PASSWORD_FAILED, false);
+        setPasswordFailed(passwordFailed);
         validatePassword();
     }
 
@@ -174,14 +207,29 @@ public class AccountSetupCredentialsFragment extends AccountSetupFragment
         super.onDestroy();
         if (mImapPasswordText != null) {
             mImapPasswordText.removeTextChangedListener(mValidationTextWatcher);
+            mImapPasswordText.setOnEditorActionListener(null);
             mImapPasswordText = null;
         }
         if (mRegularPasswordText != null) {
             mRegularPasswordText.removeTextChangedListener(mValidationTextWatcher);
+            mRegularPasswordText.setOnEditorActionListener(null);
             mRegularPasswordText = null;
         }
     }
 
+    public void setPasswordFailed(final boolean failed) {
+        if (failed) {
+            mPasswordWarningLabel.setVisibility(View.VISIBLE);
+            mEmailConfirmationLabel.setVisibility(View.VISIBLE);
+            mEmailConfirmation.setVisibility(View.VISIBLE);
+            mEmailConfirmation.setText(mEmailAddress);
+        } else {
+            mPasswordWarningLabel.setVisibility(View.GONE);
+            mEmailConfirmationLabel.setVisibility(View.GONE);
+            mEmailConfirmation.setVisibility(View.GONE);
+        }
+    }
+
     public void validatePassword() {
         final Callback callback = (Callback) getActivity();
         if (callback != null) {
diff --git a/src/com/android/email/activity/setup/AccountSetupFinal.java b/src/com/android/email/activity/setup/AccountSetupFinal.java
index 20249aa43..dd215c8f8 100644
--- a/src/com/android/email/activity/setup/AccountSetupFinal.java
+++ b/src/com/android/email/activity/setup/AccountSetupFinal.java
@@ -23,6 +23,7 @@ import android.app.AlertDialog;
 import android.app.Dialog;
 import android.app.DialogFragment;
 import android.app.Fragment;
+import android.app.FragmentManager;
 import android.app.FragmentTransaction;
 import android.app.LoaderManager;
 import android.app.ProgressDialog;
@@ -108,8 +109,10 @@ public class AccountSetupFinal extends AccountSetupActivity
             "AccountSetupFinal.authErr";
     private static final String SAVESTATE_KEY_IS_PRE_CONFIGURED = "AccountSetupFinal.preconfig";
     private static final String SAVESTATE_KEY_SKIP_AUTO_DISCOVER = "AccountSetupFinal.noAuto";
+    private static final String SAVESTATE_KEY_PASSWORD_FAILED = "AccountSetupFinal.passwordFailed";
 
     private static final String CONTENT_FRAGMENT_TAG = "AccountSetupContentFragment";
+    private static final String CREDENTIALS_BACKSTACK_TAG = "AccountSetupCredentialsFragment";
 
     // Collecting initial email and password
     private static final int STATE_BASICS = 0;
@@ -154,6 +157,7 @@ public class AccountSetupFinal extends AccountSetupActivity
     private boolean mPreConfiguredFailed = false;
 
     private VendorPolicyLoader.Provider mProvider;
+    private boolean mPasswordFailed;
 
     // UI elements
     @VisibleForTesting
@@ -210,6 +214,7 @@ public class AccountSetupFinal extends AccountSetupActivity
             mIsPreConfiguredProvider =
                     savedInstanceState.getBoolean(SAVESTATE_KEY_IS_PRE_CONFIGURED);
             mSkipAutoDiscover = savedInstanceState.getBoolean(SAVESTATE_KEY_SKIP_AUTO_DISCOVER);
+            mPasswordFailed = savedInstanceState.getBoolean(SAVESTATE_KEY_PASSWORD_FAILED);
             // I don't know why this view state doesn't get restored
             updateHeadline();
         } else {
@@ -249,6 +254,7 @@ public class AccountSetupFinal extends AccountSetupActivity
             }
             updateHeadline();
             updateContentFragment(false /* addToBackstack */);
+            mPasswordFailed = false;
         }
 
         UiUtilities.getView(this, R.id.previous).setOnClickListener(this);
@@ -398,6 +404,7 @@ public class AccountSetupFinal extends AccountSetupActivity
         outState.putBoolean(SAVESTATE_KEY_REPORT_AUTHENTICATOR_ERROR,
                 mReportAccountAuthenticatorError);
         outState.putBoolean(SAVESTATE_KEY_IS_PRE_CONFIGURED, mIsPreConfiguredProvider);
+        outState.putBoolean(SAVESTATE_KEY_PASSWORD_FAILED, mPasswordFailed);
     }
 
     /**
@@ -439,13 +446,17 @@ public class AccountSetupFinal extends AccountSetupActivity
      */
     private void updateContentFragment(boolean addToBackstack) {
         final AccountSetupFragment f;
+        String backstackTag = null;
+
         switch (mState) {
             case STATE_BASICS:
                 f = AccountSetupBasicsFragment.newInstance();
                 break;
             case STATE_CREDENTIALS:
                 f = AccountSetupCredentialsFragment.newInstance(mSetupData.getEmail(),
-                        mSetupData.getAccount().getOrCreateHostAuthRecv(this).mProtocol);
+                        mSetupData.getAccount().getOrCreateHostAuthRecv(this).mProtocol,
+                        mPasswordFailed);
+                backstackTag = CREDENTIALS_BACKSTACK_TAG;
                 break;
             case STATE_TYPE:
                 f = AccountSetupTypeFragment.newInstance();
@@ -469,7 +480,7 @@ public class AccountSetupFinal extends AccountSetupActivity
         final FragmentTransaction ft = getFragmentManager().beginTransaction();
         ft.replace(R.id.setup_fragment_container, f, CONTENT_FRAGMENT_TAG);
         if (addToBackstack) {
-            ft.addToBackStack(null);
+            ft.addToBackStack(backstackTag);
         }
         ft.commit();
     }
@@ -488,6 +499,9 @@ public class AccountSetupFinal extends AccountSetupActivity
      */
     private void resetStateFromCurrentFragment() {
         AccountSetupFragment f = getContentFragment();
+        if (mState == STATE_CREDENTIALS) {
+            mPasswordFailed = false;
+        }
         mState = f.getState();
         updateHeadline();
     }
@@ -505,6 +519,7 @@ public class AccountSetupFinal extends AccountSetupActivity
         switch (mState) {
             case STATE_BASICS:
                 onBasicsComplete();
+                // TODO: Move protocol choice before password entry
                 if (shouldDivertToManual()) {
                     // Alternate entry to the debug options screen (for devices without a physical
                     // keyboard):
@@ -544,9 +559,13 @@ public class AccountSetupFinal extends AccountSetupActivity
                 break;
             case STATE_CHECKING_PRECONFIGURED:
                 if (mPreConfiguredFailed) {
-                    mState = STATE_MANUAL_INCOMING;
-                    updateHeadline();
-                    updateContentFragment(true /* addToBackstack */);
+                    // Get rid of the previous instance of the AccountSetupCredentialsFragment.
+                    FragmentManager fm = getFragmentManager();
+                    fm.popBackStackImmediate(CREDENTIALS_BACKSTACK_TAG, 0);
+                    final AccountSetupCredentialsFragment f = (AccountSetupCredentialsFragment)
+                            getContentFragment();
+                    f.setPasswordFailed(mPasswordFailed);
+                    resetStateFromCurrentFragment();
                 } else {
                     mState = STATE_OPTIONS;
                     updateHeadline();
@@ -896,6 +915,7 @@ public class AccountSetupFinal extends AccountSetupActivity
 
     @Override
     public void onCheckSettingsError(int reason, String message) {
+        mPasswordFailed = true;
         dismissCheckSettingsFragment();
         final DialogFragment f =
                 CheckSettingsErrorDialogFragment.newInstance(reason, message);
@@ -916,7 +936,7 @@ public class AccountSetupFinal extends AccountSetupActivity
 
     @Override
     public void onCheckSettingsErrorDialogEditSettings() {
-        // If we're checking pre-configured, set a flag that we failed and navigate fowards to
+        // If we're checking pre-configured, set a flag that we failed and navigate forwards to
         // incoming settings
         if (mState == STATE_CHECKING_PRECONFIGURED || mState == STATE_AUTO_DISCOVER) {
             mPreConfiguredFailed = true;
@@ -928,6 +948,8 @@ public class AccountSetupFinal extends AccountSetupActivity
 
     @Override
     public void onCheckSettingsComplete() {
+        mPreConfiguredFailed = false;
+        mPasswordFailed = false;
         dismissCheckSettingsFragment();
         proceed();
     }