diff --git a/enrol/cohort/edit.php b/enrol/cohort/edit.php
index 02db3a13698..b921f15bffd 100644
--- a/enrol/cohort/edit.php
+++ b/enrol/cohort/edit.php
@@ -89,9 +89,24 @@ if ($mform->is_cancelled()) {
         $instance->roleid       = $data->roleid;
         $instance->customint2   = $data->customint2;
         $instance->timemodified = time();
+        // Create a new group for the cohort if requested.
+        if ($data->customint2 == COHORT_CREATE_GROUP) {
+            require_capability('moodle/course:managegroups', $context);
+            $groupid = enrol_cohort_create_new_group($course->id, $data->customint1);
+            $instance->customint2 = $groupid;
+        }
         $DB->update_record('enrol', $instance);
     }  else {
-        $enrol->add_instance($course, array('name'=>$data->name, 'status'=>$data->status, 'customint1'=>$data->customint1, 'roleid'=>$data->roleid, 'customint2'=>$data->customint2));
+        // Create a new group for the cohort if requested.
+        if ($data->customint2 == COHORT_CREATE_GROUP) {
+            require_capability('moodle/course:managegroups', $context);
+            $groupid = enrol_cohort_create_new_group($course->id, $data->customint1);
+            $enrol->add_instance($course, array('name' => $data->name, 'status' => $data->status,
+                'customint1' => $data->customint1, 'roleid' => $data->roleid, 'customint2' => $groupid));
+        } else {
+            $enrol->add_instance($course, array('name' => $data->name, 'status' => $data->status,
+                'customint1' => $data->customint1, 'roleid' => $data->roleid, 'customint2' => $data->customint2));
+        }
         if (!empty($data->submitbuttonnext)) {
             $returnurl = new moodle_url($PAGE->url);
             $returnurl->param('message', 'added');
diff --git a/enrol/cohort/edit_form.php b/enrol/cohort/edit_form.php
index bb5ee8acfba..2a02a29dd98 100644
--- a/enrol/cohort/edit_form.php
+++ b/enrol/cohort/edit_form.php
@@ -38,8 +38,11 @@ class enrol_cohort_edit_form extends moodleform {
 
         $enrol = enrol_get_plugin('cohort');
 
-
         $groups = array(0 => get_string('none'));
+        if (has_capability('moodle/course:managegroups', $coursecontext)) {
+            $groups[COHORT_CREATE_GROUP] = get_string('creategroup', 'enrol_cohort');
+        }
+
         foreach (groups_get_all_groups($course->id) as $group) {
             $groups[$group->id] = format_string($group->name, true, array('context'=>$coursecontext));
         }
diff --git a/enrol/cohort/lang/en/enrol_cohort.php b/enrol/cohort/lang/en/enrol_cohort.php
index 48550f28b16..446beae2ab1 100644
--- a/enrol/cohort/lang/en/enrol_cohort.php
+++ b/enrol/cohort/lang/en/enrol_cohort.php
@@ -26,7 +26,9 @@ $string['addgroup'] = 'Add to group';
 $string['assignrole'] = 'Assign role';
 $string['cohort:config'] = 'Configure cohort instances';
 $string['cohort:unenrol'] = 'Unenrol suspended users';
+$string['defaultgroupnametext'] = '{$a->name} cohort{$a->increment}';
 $string['instanceexists'] = 'Cohort is already synchronised with selected role';
 $string['pluginname'] = 'Cohort sync';
 $string['pluginname_desc'] = 'Cohort enrolment plugin synchronises cohort members with course participants.';
 $string['status'] = 'Active';
+$string['creategroup'] = 'Create new group';
diff --git a/enrol/cohort/lib.php b/enrol/cohort/lib.php
index 1f5a22180d7..571d01dbd4f 100644
--- a/enrol/cohort/lib.php
+++ b/enrol/cohort/lib.php
@@ -24,6 +24,11 @@
 
 defined('MOODLE_INTERNAL') || die();
 
+/**
+ * COHORT_CREATEGROUP constant for automatically creating a group for a cohort.
+ */
+define('COHORT_CREATE_GROUP', -1);
+
 /**
  * Cohort enrolment plugin implementation.
  * @author Petr Skoda
@@ -323,3 +328,38 @@ class enrol_cohort_plugin extends enrol_plugin {
 function enrol_cohort_allow_group_member_remove($itemid, $groupid, $userid) {
     return false;
 }
+
+/**
+ * Create a new group with the cohorts name.
+ *
+ * @param int $courseid
+ * @param int $cohortid
+ * @return int $groupid Group ID for this cohort.
+ */
+function enrol_cohort_create_new_group($courseid, $cohortid) {
+    global $DB;
+
+    $groupname = $DB->get_field('cohort', 'name', array('id' => $cohortid), MUST_EXIST);
+    $a = new stdClass();
+    $a->name = $groupname;
+    $a->increment = '';
+    $groupname = get_string('defaultgroupnametext', 'enrol_cohort', $a);
+    // Check to see if the cohort group name already exists. Add an incremented number if it does.
+    while ($DB->record_exists('groups', array('name' => $groupname))) {
+        $matches = array();
+        if (!preg_match('/(.*?)\(([0-9]+)\)$/', $groupname, $matches)) {
+            $a->increment = '(2)';
+        } else {
+            $a->increment = '(' . $matches[2]+1 . ')';
+        }
+        $newshortname = get_string('defaultgroupnametext', 'enrol_cohort', $a);
+        $groupname = $newshortname;
+    }
+    // Create a new group for the cohort.
+    $groupdata = new stdClass();
+    $groupdata->courseid = $courseid;
+    $groupdata->name = $groupname;
+    $groupid = groups_create_group($groupdata);
+
+    return $groupid;
+}
\ No newline at end of file
diff --git a/enrol/cohort/tests/cohortlib_test.php b/enrol/cohort/tests/cohortlib_test.php
new file mode 100644
index 00000000000..4850eaa2021
--- /dev/null
+++ b/enrol/cohort/tests/cohortlib_test.php
@@ -0,0 +1,74 @@
+<?php
+// This file is part of Moodle - http://moodle.org/
+//
+// Moodle is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+//
+// Moodle is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+// GNU General Public License for more details.
+//
+// You should have received a copy of the GNU General Public License
+// along with Moodle.  If not, see <http://www.gnu.org/licenses/>.
+
+/**
+ * Cohort enrolment sync functional test.
+ *
+ * @package    enrol_cohort
+ * @category   phpunit
+ * @copyright  2015 Adrian Greeve <adrian@moodle.com>
+ * @license    http://www.gnu.org/copyleft/gpl.html GNU GPL v3 or later
+ */
+
+defined('MOODLE_INTERNAL') || die();
+
+global $CFG;
+require_once($CFG->dirroot.'/cohort/lib.php');
+require_once($CFG->dirroot.'/group/lib.php');
+
+/**
+ * Contains tests for the cohort library.
+ *
+ * @package   enrol_cohort
+ * @copyright 2015 Adrian Greeve <adrian@moodle.com>
+ * @license   http://www.gnu.org/copyleft/gpl.html GNU GPL v3 or later
+ */
+class enrol_cohort_lib_testcase extends advanced_testcase {
+
+    /**
+     * Test that a new group with the name of the cohort is created.
+     */
+    public function test_enrol_cohort_create_new_group() {
+        global $DB;
+        $this->resetAfterTest();
+        // Create a category.
+        $category = $this->getDataGenerator()->create_category();
+        // Create two courses.
+        $course = $this->getDataGenerator()->create_course(array('category' => $category->id));
+        $course2 = $this->getDataGenerator()->create_course(array('category' => $category->id));
+        // Create a cohort.
+        $cohort = $this->getDataGenerator()->create_cohort(array('context' => context_coursecat::instance($category->id)->id));
+        // Run the function.
+        $groupid = enrol_cohort_create_new_group($course->id, $cohort->id);
+        // Check the results.
+        $group = $DB->get_record('groups', array('id' => $groupid));
+        // The group name should match the cohort name.
+        $this->assertEquals($cohort->name . ' cohort', $group->name);
+        // Group course id should match the course id.
+        $this->assertEquals($course->id, $group->courseid);
+
+        // Create a group that will have the same name as the cohort
+        $groupdata = new stdClass();
+        $groupdata->courseid = $course2->id;
+        $groupdata->name = $cohort->name . ' cohort';
+        groups_create_group($groupdata);
+        // Create a group for the cohort in course 2.
+        $groupid = enrol_cohort_create_new_group($course2->id, $cohort->id);
+        $groupinfo = $DB->get_record('groups', array('id' => $groupid));
+        // Check that the group name has been changed.
+        $this->assertEquals($cohort->name . ' cohort(2)', $groupinfo->name);
+    }
+}
\ No newline at end of file