diff --git a/org.springframework.integration/src/main/java/org/springframework/integration/config/xml/ChainParser.java b/org.springframework.integration/src/main/java/org/springframework/integration/config/xml/ChainParser.java
index c663647ce3..2fe05c16fa 100644
--- a/org.springframework.integration/src/main/java/org/springframework/integration/config/xml/ChainParser.java
+++ b/org.springframework.integration/src/main/java/org/springframework/integration/config/xml/ChainParser.java
@@ -27,19 +27,21 @@ import org.springframework.beans.factory.support.BeanDefinitionBuilder;
 import org.springframework.beans.factory.support.BeanDefinitionReaderUtils;
 import org.springframework.beans.factory.support.ManagedList;
 import org.springframework.beans.factory.xml.ParserContext;
+import org.springframework.integration.handler.AbstractReplyProducingMessageHandler;
 
 /**
  * Parser for the <chain> element.
  * 
  * @author Mark Fisher
+ * @author Iwein Fuld
  */
 public class ChainParser extends AbstractConsumerEndpointParser {
 
 	@Override
 	@SuppressWarnings("unchecked")
 	protected BeanDefinitionBuilder parseHandler(Element element, ParserContext parserContext) {
-		BeanDefinitionBuilder builder = BeanDefinitionBuilder.genericBeanDefinition(
-				IntegrationNamespaceUtils.BASE_PACKAGE + ".handler.MessageHandlerChain");
+		BeanDefinitionBuilder builder = BeanDefinitionBuilder
+				.genericBeanDefinition(IntegrationNamespaceUtils.BASE_PACKAGE + ".handler.MessageHandlerChain");
 		ManagedList handlerList = new ManagedList();
 		NodeList children = element.getChildNodes();
 		for (int i = 0; i < children.getLength(); i++) {
@@ -54,7 +56,13 @@ public class ChainParser extends AbstractConsumerEndpointParser {
 	}
 
 	private String parseChild(Element element, ParserContext parserContext, BeanDefinition parentDefinition) {
-		BeanDefinition beanDefinition = parserContext.getDelegate().parseCustomElement(element, parentDefinition);
+		BeanDefinition beanDefinition;
+		if (element.getLocalName().equals("bean")) {
+			beanDefinition = parserContext.getDelegate().parseBeanDefinitionElement(element).getBeanDefinition();
+		}
+		else {
+			beanDefinition = parserContext.getDelegate().parseCustomElement(element, parentDefinition);
+		}
 		if (beanDefinition == null) {
 			parserContext.getReaderContext().error("child BeanDefinition must not be null", element);
 		}
diff --git a/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests-context.xml b/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests-context.xml
index 91425a9643..274a91ab30 100644
--- a/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests-context.xml
+++ b/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests-context.xml
@@ -1,58 +1,62 @@
 <?xml version="1.0" encoding="UTF-8"?>
-<beans:beans xmlns="http://www.springframework.org/schema/integration"
-	xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
-	xmlns:beans="http://www.springframework.org/schema/beans"
+<beans:beans xmlns="http://www.springframework.org/schema/integration"
+	xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xmlns:beans="http://www.springframework.org/schema/beans"
 	xsi:schemaLocation="http://www.springframework.org/schema/beans
 			http://www.springframework.org/schema/beans/spring-beans-2.5.xsd
 			http://www.springframework.org/schema/integration
 			http://www.springframework.org/schema/integration/spring-integration-1.0.xsd">
-
-	<channel id="filterInput"/>
 
 	<channel id="pollableInput">
-		<queue/>
+		<queue />
 	</channel>
 
 	<channel id="output">
-		<queue/>
+		<queue />
 	</channel>
 
 	<channel id="replyOutput">
-		<queue/>
+		<queue />
 	</channel>
 
 	<chain input-channel="filterInput" output-channel="output">
-		<filter ref="typeSelector"/>
-		<service-activator ref="testHandler"/>
+		<filter ref="typeSelector" />
+		<service-activator ref="testHandler" />
 	</chain>
 
 	<chain input-channel="headerEnricherInput">
-		<header-enricher reply-channel="replyOutput" correlation-id="ABC">
-			<header name="testValue" value="XYZ"/>
-			<header name="testRef" ref="testHeaderValue"/>
+		<header-enricher reply-channel="replyOutput"
+			correlation-id="ABC">
+			<header name="testValue" value="XYZ" />
+			<header name="testRef" ref="testHeaderValue" />
 		</header-enricher>
-		<service-activator ref="testHandler"/>
+		<service-activator ref="testHandler" />
 	</chain>
 
 	<chain input-channel="pollableInput" output-channel="output">
 		<poller>
-			<interval-trigger interval="10000"/>
+			<interval-trigger interval="10000" />
 		</poller>
-		<filter ref="typeSelector"/>
-		<service-activator ref="testHandler"/>
+		<filter ref="typeSelector" />
+		<service-activator ref="testHandler" />
+	</chain>
+
+	<chain input-channel="beanInput" output-channel="output">
+		<beans:bean
+			class="org.springframework.integration.config.ChainParserTests$StubHandler" />
 	</chain>
 
 	<beans:bean id="testHeaderValue" class="java.lang.Integer">
-		<beans:constructor-arg value="123"/>
+		<beans:constructor-arg value="123" />
 	</beans:bean>
 
-	<beans:bean id="typeSelector" class="org.springframework.integration.selector.PayloadTypeSelector">
-		<beans:constructor-arg value="java.lang.String"/>
+	<beans:bean id="typeSelector"
+		class="org.springframework.integration.selector.PayloadTypeSelector">
+		<beans:constructor-arg value="java.lang.String" />
 	</beans:bean>
 
-	<beans:bean id="testHandler" class="org.springframework.integration.config.TestHandler">
-		<beans:constructor-arg value="1"/>
-		<beans:property name="replyMessageText" value="foo"/>
-	</beans:bean>
-
+	<beans:bean id="testHandler"
+		class="org.springframework.integration.config.TestHandler">
+		<beans:constructor-arg value="1" />
+		<beans:property name="replyMessageText" value="foo" />
+	</beans:bean>
 </beans:beans>
diff --git a/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests.java b/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests.java
index 699da0e4a4..d01b7a2343 100644
--- a/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests.java
+++ b/org.springframework.integration/src/test/java/org/springframework/integration/config/ChainParserTests.java
@@ -16,26 +16,35 @@
 
 package org.springframework.integration.config;
 
+import static org.hamcrest.CoreMatchers.is;
 import static org.junit.Assert.assertEquals;
 import static org.junit.Assert.assertNotNull;
 import static org.junit.Assert.assertNull;
+import static org.junit.Assert.assertThat;
 
 import org.junit.Test;
+import org.junit.runner.RunWith;
 
 import org.springframework.beans.factory.annotation.Autowired;
 import org.springframework.beans.factory.annotation.Qualifier;
 import org.springframework.integration.channel.PollableChannel;
 import org.springframework.integration.core.Message;
 import org.springframework.integration.core.MessageChannel;
+import org.springframework.integration.handler.AbstractReplyProducingMessageHandler;
+import org.springframework.integration.handler.ReplyMessageHolder;
 import org.springframework.integration.message.MessageBuilder;
+import org.springframework.integration.message.MessageHandler;
 import org.springframework.test.context.ContextConfiguration;
 import org.springframework.test.context.junit4.AbstractJUnit4SpringContextTests;
+import org.springframework.test.context.junit4.SpringJUnit4ClassRunner;
 
 /**
  * @author Mark Fisher
+ * @author Iwein Fuld
  */
 @ContextConfiguration
-public class ChainParserTests extends AbstractJUnit4SpringContextTests {
+@RunWith(SpringJUnit4ClassRunner.class)
+public class ChainParserTests  {
 
 	@Autowired
 	@Qualifier("filterInput")
@@ -57,6 +66,13 @@ public class ChainParserTests extends AbstractJUnit4SpringContextTests {
 	@Qualifier("replyOutput")
 	private PollableChannel replyOutput;
 
+	
+	@Autowired
+	@Qualifier("beanInput")
+	private MessageChannel beanInput;
+
+	public static Message successMessage = MessageBuilder.withPayload("success").build();
+
 
 	@Test
 	public void chainWithAcceptingFilter() {	
@@ -95,5 +111,22 @@ public class ChainParserTests extends AbstractJUnit4SpringContextTests {
 		assertNotNull(reply);
 		assertEquals("foo", reply.getPayload());
 	}
+	
+	@Test
+	public void chainHandlerBean() throws Exception {
+		Message<?> message = MessageBuilder.withPayload("test").build();
+		this.beanInput.send(message);
+		Message<?> reply = this.output.receive(3000);
+		assertNotNull(reply);
+		assertThat(reply, is(successMessage));
+	}
+	
+	public static class StubHandler extends AbstractReplyProducingMessageHandler {
+		@Override
+		protected void handleRequestMessage(Message<?> requestMessage, ReplyMessageHolder replyMessageHolder) {
+			replyMessageHolder.add(successMessage);
+		}
+		
+	}
 
 }