diff --git a/data/stk_config.xml b/data/stk_config.xml
index f5d0dc555..1c2cb87aa 100644
--- a/data/stk_config.xml
+++ b/data/stk_config.xml
@@ -160,8 +160,14 @@
 
   <!-- Networking 
        state-frequency: how many states the server will send per second.
+       positional-smoothing: smoothing factor used in exponential smoothing
+           depending on error.
+       rotational-smoothing: slerp factor used in exponential smoothing
+           of rotations depending on error.
   -->
-  <networking state-frequency="10" />
+  <networking state-frequency="10"
+              positional-smoothing="0.25:0.95 1.0:0.85"
+              rotational-smoothing="0.25:0.95 1.0:0.85" />
 
   <!-- The field od views for 1-4 player split screen. fov-3 is
        actually not used (since 3 player split screen uses the
diff --git a/src/config/stk_config.cpp b/src/config/stk_config.cpp
index cd04344ed..57787c445 100644
--- a/src/config/stk_config.cpp
+++ b/src/config/stk_config.cpp
@@ -117,6 +117,15 @@ void STKConfig::load(const std::string &filename)
         Log::fatal("StkConfig", "Wrong number of item switches defined in stk_config");
     }
 
+    if (m_positional_smoothing.size() == 0)
+    {
+        Log::fatal("StkConfig", "No positional smoothing defined in stk_config.");
+    }
+    if (m_rotational_smoothing.size() == 0)
+    {
+        Log::fatal("StkConfig", "No rotationalsmoothing defined in stk_config.");
+    }
+
     CHECK_NEG(m_max_karts,                 "<karts max=..."             );
     CHECK_NEG(m_item_switch_time,          "item-switch-time"           );
     CHECK_NEG(m_bubblegum_counter,         "bubblegum disappear counter");
@@ -350,7 +359,9 @@ void STKConfig::getAllData(const XMLNode * root)
 
     if (const XMLNode *networking_node = root->getNode("networking"))
     {
-        networking_node->get("state-frequency", &m_network_state_frequeny);
+        networking_node->get("state-frequency",      &m_network_state_frequeny);
+        networking_node->get("positional-smoothing", &m_positional_smoothing  );
+        networking_node->get("rotational-smoothing", &m_rotational_smoothing  );
     }
 
     if(const XMLNode *replay_node = root->getNode("replay"))
diff --git a/src/config/stk_config.hpp b/src/config/stk_config.hpp
index 40b4d884a..c2f89f6b2 100644
--- a/src/config/stk_config.hpp
+++ b/src/config/stk_config.hpp
@@ -27,6 +27,7 @@
  */
 
 #include "network/remote_kart_info.hpp"
+#include "utils/interpolation_array.hpp"
 #include "utils/no_copy.hpp"
 
 #include <vector>
@@ -85,6 +86,13 @@ public:
     /** How many state updates per second the server will send. */
     int m_network_state_frequeny;
 
+    /** Smoothing of prediction errors for position, defined as an
+     *  InterpolationArray. */
+    InterpolationArray m_positional_smoothing;
+    /** Smoothing of prediction errors for rotations, defined as an
+     *  InterpolationArray. */
+    InterpolationArray m_rotational_smoothing;
+
     /** If the angle between a normal on a vertex and the normal of the
      *  triangle are more than this value, the physics will use the normal
      *  of the triangle in smoothing normal. */
diff --git a/src/karts/kart_rewinder.cpp b/src/karts/kart_rewinder.cpp
index 4a560e2ba..9490b538f 100644
--- a/src/karts/kart_rewinder.cpp
+++ b/src/karts/kart_rewinder.cpp
@@ -51,6 +51,26 @@ void KartRewinder::reset()
     Rewinder::reset();
 }   // reset
 
+// ----------------------------------------------------------------------------
+/** This function is called immediately before a rewind is done and saves
+ *  the current transform for the kart. The difference between this saved
+ *  transform and the new transform after rewind is the error that needs
+ *  (smoothly) be applied to the graphical position of the kart. 
+ */
+void KartRewinder::saveTransform()
+{
+    m_saved_transform = getTrans();
+}   // saveTransform
+
+// ----------------------------------------------------------------------------
+void KartRewinder::computeError()
+{
+    //btTransform error = getTrans() - m_saved_transform;
+    Vec3 pos_error = getTrans().getOrigin() - m_saved_transform.getOrigin();
+    btQuaternion rot_error(0, 0, 0, 1);
+    Kart::addError(pos_error, rot_error);
+}   // computeError
+
 // ----------------------------------------------------------------------------
 /** Saves all state information for a kart in a memory buffer. The memory
  *  is allocated here and the address returned. It will then be managed
@@ -114,6 +134,15 @@ void KartRewinder::rewindToState(BareNetworkString *buffer)
     t.setRotation(buffer->getQuat());
     btRigidBody *body = getBody();
     body->setLinearVelocity(buffer->getVec3());
+    Log::info("KartRewinder", "t %f xyz %f %f %f v %f %f %f",
+        World::getWorld()->getTime(),
+        t.getOrigin().getX(),
+        t.getOrigin().getY(),
+        t.getOrigin().getZ(),
+        body->getLinearVelocity().getX(),
+        body->getLinearVelocity().getY(),
+        body->getLinearVelocity().getZ());
+
     body->setAngularVelocity(buffer->getVec3());
     // This function also reads the velocity, so it must be called
     // after the velocities are set
diff --git a/src/karts/kart_rewinder.hpp b/src/karts/kart_rewinder.hpp
index 705016bec..6343eeed5 100644
--- a/src/karts/kart_rewinder.hpp
+++ b/src/karts/kart_rewinder.hpp
@@ -34,6 +34,9 @@ private:
     // Flags to indicate the different event types
     enum { EVENT_CONTROL = 0x01,
            EVENT_ATTACH  = 0x02 };
+
+    /** The transform of the kart before a rewind starts. */
+    btTransform m_saved_transform;
 public:
 	             KartRewinder(const std::string& ident,
                               unsigned int world_kart_id,
@@ -41,6 +44,8 @@ public:
                               PerPlayerDifficulty difficulty,
                               KartRenderType krt = KRT_DEFAULT);
    virtual      ~KartRewinder() {};
+   virtual void  saveTransform() OVERRIDE;
+   virtual void  computeError() OVERRIDE;
    virtual BareNetworkString* saveState() const;
    void          reset();
    virtual void  rewindToState(BareNetworkString *p) OVERRIDE;
diff --git a/src/karts/moveable.cpp b/src/karts/moveable.cpp
index 6af29a679..8817f3531 100644
--- a/src/karts/moveable.cpp
+++ b/src/karts/moveable.cpp
@@ -24,6 +24,9 @@
 #include "graphics/irr_driver.hpp"
 #include "graphics/material.hpp"
 #include "graphics/material_manager.hpp"
+#include "modes/world.hpp"
+#include "network/network_config.hpp"
+#include "network/rewind_manager.hpp"
 #include "tracks/track.hpp"
 
 #include "ISceneNode.h"
@@ -35,6 +38,8 @@ Moveable::Moveable()
     m_mesh            = NULL;
     m_node            = NULL;
     m_heading         = 0;
+    m_positional_error = Vec3(0.0f, 0.0f, 0.0f);
+    m_rotational_error = btQuaternion(0.0f, 0.0f, 0.0f, 1.0f);
 }   // Moveable
 
 //-----------------------------------------------------------------------------
@@ -56,6 +61,24 @@ void Moveable::setNode(scene::ISceneNode *n)
     m_node          = n;
 }   // setNode
 
+//-----------------------------------------------------------------------------
+/** Adds a new error between graphical and physical position/rotation. Called
+ *  in case of a rewind to allow to for smoothing the visuals in case of
+ *  incorrect client prediction.
+ *  \param pos_error Positional error to add.
+ *  \param rot_Error Rotational error to add.
+ */
+void Moveable::addError(const Vec3& pos_error,
+                        const btQuaternion &rot_error)
+{
+    m_positional_error += pos_error;
+    Log::info("VisualError", "time %f addError %f %f %f size %f",
+        World::getWorld()->getTime(),
+        m_positional_error.getX(), m_positional_error.getY(), m_positional_error.getZ(),
+        m_positional_error.length());
+    m_rotational_error *= rot_error;
+}   // addError
+
 //-----------------------------------------------------------------------------
 /** Updates the graphics model. Mainly set the graphical position to be the
  *  same as the physics position, but uses offsets to position and rotation
@@ -66,8 +89,20 @@ void Moveable::setNode(scene::ISceneNode *n)
 void Moveable::updateGraphics(float dt, const Vec3& offset_xyz,
                               const btQuaternion& rotation)
 {
+    // If this is a client, don't smooth error during rewinds
+    if (World::getWorld()->isNetworkWorld() &&
+        NetworkConfig::get()->isClient() &&
+        !RewindManager::get()->isRewinding())
+    {
+        float error = m_positional_error.length();
+        m_positional_error *= stk_config->m_positional_smoothing.get(error);
+        Log::info("VisualError", "time %f reduceError %f %f %f size %f",
+            World::getWorld()->getTime(),
+            m_positional_error.getX(), m_positional_error.getY(), m_positional_error.getZ(),
+            m_positional_error.length());
+    }
 #ifndef SERVER_ONLY
-    Vec3 xyz=getXYZ()+offset_xyz;
+    Vec3 xyz=getXYZ()+offset_xyz - m_positional_error;
     m_node->setPosition(xyz.toIrrVector());
     btQuaternion r_all = getRotation()*rotation;
     if(btFuzzyZero(r_all.getX()) && btFuzzyZero(r_all.getY()-0.70710677f) &&
diff --git a/src/karts/moveable.hpp b/src/karts/moveable.hpp
index 4908be575..40946c87f 100644
--- a/src/karts/moveable.hpp
+++ b/src/karts/moveable.hpp
@@ -40,7 +40,8 @@ class Material;
 class Moveable: public NoCopy
 {
 private:
-    btVector3              m_velocityLC;      /**<Velocity in kart coordinates. */
+    Vec3                   m_velocityLC;      /**<Velocity in kart coordinates. */
+    /** The bullet transform of this rigid body. */
     btTransform            m_transform;
     /** The 'real' heading between -180 to 180 degrees. */
     float                  m_heading;
@@ -49,6 +50,14 @@ private:
     /** The roll between -180 and 180 degrees. */
     float                  m_roll;
 
+    /** Client prediction in networked games might cause the visual
+     *  and physical position to be different. For visual smoothing
+     *  this variable accumulates the error and reduces it over time. */
+    Vec3                   m_positional_error;
+
+    /** Similar to m_positional_error for rotation. */
+    btQuaternion           m_rotational_error;
+
 protected:
     UserPointer            m_user_pointer;
     scene::IMesh          *m_mesh;
@@ -119,7 +128,8 @@ public:
                  &getTrans() const {return m_transform;}
     void          setTrans(const btTransform& t);
     void          updatePosition();
-}
-;   // class Moveable
+    void          addError(const Vec3& pos_error,
+                           const btQuaternion &rot_error);
+};   // class Moveable
 
 #endif
diff --git a/src/network/rewind_manager.cpp b/src/network/rewind_manager.cpp
index 2791b2fcd..d38665056 100755
--- a/src/network/rewind_manager.cpp
+++ b/src/network/rewind_manager.cpp
@@ -277,6 +277,16 @@ void RewindManager::rewindTo(float rewind_time)
     assert(!m_is_rewinding);
     history->doReplayHistory(History::HISTORY_NONE);
 
+    // First save all current transforms so that the error
+    // can be computed between the transforms before and after
+    // the rewind.
+    AllRewinder::iterator rewinder;
+    for (rewinder = m_all_rewinder.begin(); 
+         rewinder != m_all_rewinder.end(); ++rewinder)
+    {
+        (*rewinder)->saveTransform();
+    }
+
     // Then undo the rewind infos going backwards in time
     // --------------------------------------------------
     m_is_rewinding = true;
@@ -335,6 +345,14 @@ void RewindManager::rewindTo(float rewind_time)
         world->setTime(current->getTime());
     }   // while (world->getTime() < current_time)
 
+    // Now compute the errors which need to be visually smoothed
+    for (rewinder = m_all_rewinder.begin();
+        rewinder != m_all_rewinder.end(); ++rewinder)
+    {
+        (*rewinder)->computeError();
+    }
+
+
     m_is_rewinding = false;
 }   // rewindTo
 
diff --git a/src/network/rewind_queue.cpp b/src/network/rewind_queue.cpp
index 75a28afd9..d76299714 100755
--- a/src/network/rewind_queue.cpp
+++ b/src/network/rewind_queue.cpp
@@ -435,6 +435,8 @@ void RewindQueue::unitTesting()
         virtual void undoState(BareNetworkString *s) {}
         virtual void undo(BareNetworkString *s) {}
         virtual void rewind(BareNetworkString *s) {}
+        virtual void saveTransform() {}
+        virtual void computeError() {}
         DummyRewinder() : Rewinder(true) {}
     };
     DummyRewinder *dummy_rewinder = new DummyRewinder();
diff --git a/src/network/rewinder.hpp b/src/network/rewinder.hpp
index f4d116887..327ed201d 100644
--- a/src/network/rewinder.hpp
+++ b/src/network/rewinder.hpp
@@ -24,11 +24,26 @@ class BareNetworkString;
 class Rewinder
 {
 private:
+    /** True if this object can be destroyed, i.e. if this object is a 'stand
+     *  alone' (i.e. not used in inheritance). If the object is used in
+     *  inheritance (e.g. KartRewinder, which is a Rewinder and Kart), then
+     *  freeing the kart will free this rewinder instance as well.
+     */
     bool m_can_be_destroyed;
+
 public:
  	        Rewinder(bool can_be_destroyed);
     virtual ~Rewinder();
 
+    /** Called before a rewind. Is used to save the previous position of an
+     *  object before a rewind, so that the error due to a rewind can be
+     *  computed. */
+    virtual void saveTransform() = 0;
+
+    /** Called when a rewind is finished, and is used to compute the error
+     *  caused by the rewind (which is then visually smoothed over time). */
+    virtual void computeError() = 0;
+
     /** Provides a copy of the state of the object in one memory buffer.
      *  The memory is managed by the RewindManager.
      *  \param[out] buffer The address of the memory buffer with the state.