diff --git a/src/domain/session/room/RoomViewModel.js b/src/domain/session/room/RoomViewModel.js
index 86edf027..b5c05be7 100644
--- a/src/domain/session/room/RoomViewModel.js
+++ b/src/domain/session/room/RoomViewModel.js
@@ -32,6 +32,7 @@ export class RoomViewModel extends ViewModel {
         this._sendError = null;
         this._closeCallback = closeCallback;
         this._composerVM = new ComposerViewModel(this);
+        this._clearUnreadTimout = null;
     }
 
     async load() {
@@ -49,6 +50,15 @@ export class RoomViewModel extends ViewModel {
             this._timelineError = err;
             this.emitChange("error");
         }
+        this._clearUnreadTimout = this.clock.createTimeout(2000);
+        try {
+            await this._clearUnreadTimout.elapsed();
+            await this._room.clearUnread();
+        } catch (err) {
+            if (err.name !== "AbortError") {
+                throw err;
+            }    
+        }
     }
 
     dispose() {
@@ -57,6 +67,10 @@ export class RoomViewModel extends ViewModel {
             // will stop the timeline from delivering updates on entries
             this._timeline.close();
         }
+        if (this._clearUnreadTimout) {
+            this._clearUnreadTimout.abort();
+            this._clearUnreadTimout = null;
+        }
     }
 
     close() {
diff --git a/src/domain/session/roomlist/RoomTileViewModel.js b/src/domain/session/roomlist/RoomTileViewModel.js
index 56d0345f..9fa7df0f 100644
--- a/src/domain/session/roomlist/RoomTileViewModel.js
+++ b/src/domain/session/roomlist/RoomTileViewModel.js
@@ -17,17 +17,18 @@ limitations under the License.
 import {avatarInitials, getIdentifierColorNumber} from "../../avatar.js";
 import {ViewModel} from "../../ViewModel.js";
 
+function isSortedAsUnread(vm) {
+    return vm.isUnread || (vm.isOpen && vm._wasUnreadWhenOpening);
+}
+
 export class RoomTileViewModel extends ViewModel {
-    // we use callbacks to parent VM instead of emit because
-    // it would be annoying to keep track of subscriptions in
-    // parent for all RoomTileViewModels
-    // emitUpdate is ObservableMap/ObservableList update mechanism
     constructor(options) {
         super(options);
         const {room, emitOpen} = options;
         this._room = room;
         this._emitOpen = emitOpen;
         this._isOpen = false;
+        this._wasUnreadWhenOpening = false;
     }
 
     // called by parent for now (later should integrate with router)
@@ -39,24 +40,53 @@ export class RoomTileViewModel extends ViewModel {
     }
 
     open() {
-        this._isOpen = true;
-        this.emitChange("isOpen");
-        this._emitOpen(this._room, this);
+        if (!this._isOpen) {
+            this._isOpen = true;
+            this._wasUnreadWhenOpening = this._room.isUnread;
+            this.emitChange("isOpen");
+            this._emitOpen(this._room, this);
+        }
     }
 
     compare(other) {
-        // sort alphabetically
-        const nameCmp = this._room.name.localeCompare(other._room.name);
-        if (nameCmp === 0) {
-            return this._room.id.localeCompare(other._room.id);
+        const myRoom = this._room;
+        const theirRoom = other._room;
+
+        if (isSortedAsUnread(this) !== isSortedAsUnread(other)) {
+            if (isSortedAsUnread(this)) {
+                return -1;
+            }
+            return 1;
         }
-        return nameCmp;
+        const myTimestamp = myRoom.lastMessageTimestamp;
+        const theirTimestamp = theirRoom.lastMessageTimestamp;
+        // rooms with a timestamp come before rooms without one
+        if ((myTimestamp === null) !== (theirTimestamp === null)) {
+            if (theirTimestamp === null) {
+                return -1;
+            }
+            return 1;
+        }
+        const timeDiff = theirTimestamp - myTimestamp;
+        if (timeDiff === 0) {
+            // sort alphabetically
+            const nameCmp = this._room.name.localeCompare(other._room.name);
+            if (nameCmp === 0) {
+                return this._room.id.localeCompare(other._room.id);
+            }
+            return nameCmp;
+        }
+        return timeDiff;
     }
 
     get isOpen() {
         return this._isOpen;
     }
 
+    get isUnread() {
+        return this._room.isUnread;
+    }
+
     get name() {
         return this._room.name;
     }
@@ -80,4 +110,12 @@ export class RoomTileViewModel extends ViewModel {
     get avatarTitle() {
         return this.name;
     }
+
+    get badgeCount() {
+        return this._room.notificationCount;
+    }
+
+    get isHighlighted() {
+        return this._room.highlightCount !== 0;
+    }
 }
diff --git a/src/matrix/Sync.js b/src/matrix/Sync.js
index 4b4acd9d..e6de7146 100644
--- a/src/matrix/Sync.js
+++ b/src/matrix/Sync.js
@@ -142,7 +142,7 @@ export class Sync {
                         room = this._session.createRoom(roomId);
                     }
                     console.log(` * applying sync response to room ${roomId} ...`);
-                    const changes = await room.writeSync(roomResponse, membership, syncTxn);
+                    const changes = await room.writeSync(roomResponse, membership, isInitialSync, syncTxn);
                     roomChanges.push({room, changes});
                 });
                 await Promise.all(promises);
diff --git a/src/matrix/net/HomeServerApi.js b/src/matrix/net/HomeServerApi.js
index ba4adb7f..234c8bc3 100644
--- a/src/matrix/net/HomeServerApi.js
+++ b/src/matrix/net/HomeServerApi.js
@@ -136,6 +136,11 @@ export class HomeServerApi {
         return this._put(`/rooms/${encodeURIComponent(roomId)}/send/${encodeURIComponent(eventType)}/${encodeURIComponent(txnId)}`, {}, content, options);
     }
 
+    receipt(roomId, receiptType, eventId, options = null) {
+        return this._post(`/rooms/${encodeURIComponent(roomId)}/receipt/${encodeURIComponent(receiptType)}/${encodeURIComponent(eventId)}`,
+            {}, {}, options);
+    }
+
     passwordLogin(username, password, options = null) {
         return this._post("/login", null, {
           "type": "m.login.password",
diff --git a/src/matrix/room/Room.js b/src/matrix/room/Room.js
index 5ac77009..7d482201 100644
--- a/src/matrix/room/Room.js
+++ b/src/matrix/room/Room.js
@@ -31,7 +31,7 @@ export class Room extends EventEmitter {
         this._roomId = roomId;
         this._storage = storage;
         this._hsApi = hsApi;
-		this._summary = new RoomSummary(roomId);
+		this._summary = new RoomSummary(roomId, user.id);
         this._fragmentIdComparer = new FragmentIdComparer([]);
 		this._syncWriter = new SyncWriter({roomId, fragmentIdComparer: this._fragmentIdComparer});
         this._emitCollectionChange = emitCollectionChange;
@@ -42,8 +42,13 @@ export class Room extends EventEmitter {
 	}
 
     /** @package */
-    async writeSync(roomResponse, membership, txn) {
-		const summaryChanges = this._summary.writeSync(roomResponse, membership, txn);
+    async writeSync(roomResponse, membership, isInitialSync, txn) {
+        const isTimelineOpen = !!this._timeline;
+		const summaryChanges = this._summary.writeSync(
+            roomResponse,
+            membership,
+            isInitialSync, isTimelineOpen,
+            txn);
 		const {entries, newLiveKey, changedMembers} = await this._syncWriter.writeSync(roomResponse, txn);
         let removedPendingEvents;
         if (roomResponse.timeline && roomResponse.timeline.events) {
@@ -184,6 +189,64 @@ export class Room extends EventEmitter {
         return this._summary.avatarUrl;
     }
 
+    get lastMessageTimestamp() {
+        return this._summary.lastMessageTimestamp;
+    }
+
+    get isUnread() {
+        return this._summary.isUnread;
+    }
+
+    get notificationCount() {
+        return this._summary.notificationCount;
+    }
+    
+    get highlightCount() {
+        return this._summary.highlightCount;
+    }
+
+    async _getLastEventId() {
+        const lastKey = this._syncWriter.lastMessageKey;
+        if (lastKey) {
+            const txn = await this._storage.readTxn([
+                this._storage.storeNames.timelineEvents,
+            ]);
+            const eventEntry = await txn.timelineEvents.get(this._roomId, lastKey);
+            return eventEntry?.event?.event_id;
+        }
+    }
+
+    async clearUnread() {
+        if (this.isUnread || this.notificationCount) {
+            const txn = await this._storage.readWriteTxn([
+                this._storage.storeNames.roomSummary,
+            ]);
+            let data;
+            try {
+                data = this._summary.writeClearUnread(txn);
+            } catch (err) {
+                txn.abort();
+                throw err;
+            }
+            await txn.complete();
+            this._summary.applyChanges(data);
+            this.emit("change");
+            this._emitCollectionChange(this);
+            
+            try {
+                const lastEventId = await this._getLastEventId();
+                if (lastEventId) {
+                    await this._hsApi.receipt(this._roomId, "m.read", lastEventId);
+                }
+            } catch (err) {
+                // ignore ConnectionError
+                if (err.name !== "ConnectionError") {
+                    throw err;
+                }
+            }
+        }
+    }
+
     /** @public */
     async openTimeline() {
         if (this._timeline) {
diff --git a/src/matrix/room/RoomSummary.js b/src/matrix/room/RoomSummary.js
index bef9424c..3f13bd1e 100644
--- a/src/matrix/room/RoomSummary.js
+++ b/src/matrix/room/RoomSummary.js
@@ -14,7 +14,7 @@ See the License for the specific language governing permissions and
 limitations under the License.
 */
 
-function applySyncResponse(data, roomResponse, membership) {
+function applySyncResponse(data, roomResponse, membership, isInitialSync, isTimelineOpen, ownUserId) {
     if (roomResponse.summary) {
         data = updateSummary(data, roomResponse.summary);
     }
@@ -24,7 +24,7 @@ function applySyncResponse(data, roomResponse, membership) {
     }
     // state comes before timeline
     if (roomResponse.state) {
-        data = roomResponse.state.events.reduce(processEvent, data);
+        data = roomResponse.state.events.reduce(processStateEvent, data);
     }
     if (roomResponse.timeline) {
         const {timeline} = roomResponse;
@@ -32,45 +32,43 @@ function applySyncResponse(data, roomResponse, membership) {
             data = data.cloneIfNeeded();
             data.lastPaginationToken = timeline.prev_batch;
         }
-        data = timeline.events.reduce(processEvent, data);
+        data = timeline.events.reduce((data, event) => {
+            if (typeof event.state_key === "string") {
+                return processStateEvent(data, event);
+            } else {
+                return processTimelineEvent(data, event,
+                    isInitialSync, isTimelineOpen, ownUserId);
+            }
+        }, data);
     }
     const unreadNotifications = roomResponse.unread_notifications;
     if (unreadNotifications) {
         data = data.cloneIfNeeded();
-        data.highlightCount = unreadNotifications.highlight_count;
+        data.highlightCount = unreadNotifications.highlight_count || 0;
         data.notificationCount = unreadNotifications.notification_count;
     }
 
     return data;
 }
 
-function processEvent(data, event) {
+function processStateEvent(data, event) {
     if (event.type === "m.room.encryption") {
         if (!data.isEncrypted) {
             data = data.cloneIfNeeded();
             data.isEncrypted = true;
         }
-    }
-    if (event.type === "m.room.name") {
+    } else if (event.type === "m.room.name") {
         const newName = event.content?.name;
         if (newName !== data.name) {
             data = data.cloneIfNeeded();
             data.name = newName;
         }
-    } if (event.type === "m.room.avatar") {
+    } else if (event.type === "m.room.avatar") {
         const newUrl = event.content?.url;
         if (newUrl !== data.avatarUrl) {
             data = data.cloneIfNeeded();
             data.avatarUrl = newUrl;
         }
-    } else if (event.type === "m.room.message") {
-        const {content} = event;
-        const body = content?.body;
-        const msgtype = content?.msgtype;
-        if (msgtype === "m.text") {
-            data = data.cloneIfNeeded();
-            data.lastMessageBody = body;
-        }
     } else if (event.type === "m.room.canonical_alias") {
         const content = event.content;
         data = data.cloneIfNeeded();
@@ -80,6 +78,23 @@ function processEvent(data, event) {
     return data;
 }
 
+function processTimelineEvent(data, event, isInitialSync, isTimelineOpen, ownUserId) {
+    if (event.type === "m.room.message") {
+        data = data.cloneIfNeeded();
+        data.lastMessageTimestamp = event.origin_server_ts;
+        if (!isInitialSync && event.sender !== ownUserId && !isTimelineOpen) {
+            data.isUnread = true;
+        }
+        const {content} = event;
+        const body = content?.body;
+        const msgtype = content?.msgtype;
+        if (msgtype === "m.text") {
+            data.lastMessageBody = body;
+        }
+    }
+    return data;
+}
+
 function updateSummary(data, summary) {
     const heroes = summary["m.heroes"];
     const inviteCount = summary["m.joined_member_count"];
@@ -105,10 +120,10 @@ class SummaryData {
         this.roomId = copy ? copy.roomId : roomId;
         this.name = copy ? copy.name : null;
         this.lastMessageBody = copy ? copy.lastMessageBody : null;
-        this.unreadCount = copy ? copy.unreadCount : null;
-        this.mentionCount = copy ? copy.mentionCount : null;
-        this.isEncrypted = copy ? copy.isEncrypted : null;
-        this.isDirectMessage = copy ? copy.isDirectMessage : null;
+        this.lastMessageTimestamp = copy ? copy.lastMessageTimestamp : null;
+        this.isUnread = copy ? copy.isUnread : false;
+        this.isEncrypted = copy ? copy.isEncrypted : false;
+        this.isDirectMessage = copy ? copy.isDirectMessage : false;
         this.membership = copy ? copy.membership : null;
         this.inviteCount = copy ? copy.inviteCount : 0;
         this.joinCount = copy ? copy.joinCount : 0;
@@ -138,7 +153,8 @@ class SummaryData {
 }
 
 export class RoomSummary {
-	constructor(roomId) {
+	constructor(roomId, ownUserId) {
+        this._ownUserId = ownUserId;
         this._data = new SummaryData(null, roomId);
 	}
 
@@ -158,10 +174,26 @@ export class RoomSummary {
         return this._data.roomId;
 	}
 
+    get isUnread() {
+        return this._data.isUnread;
+    }
+
+    get notificationCount() {
+        return this._data.notificationCount;
+    }
+
+    get highlightCount() {
+        return this._data.highlightCount;
+    }
+
 	get lastMessage() {
 		return this._data.lastMessageBody;
 	}
 
+    get lastMessageTimestamp() {
+        return this._data.lastMessageTimestamp;
+    }
+
 	get inviteCount() {
 		return this._data.inviteCount;
 	}
@@ -182,6 +214,15 @@ export class RoomSummary {
         return this._data.lastPaginationToken;
     }
 
+    writeClearUnread(txn) {
+        const data = new SummaryData(this._data);
+        data.isUnread = false;
+        data.notificationCount = 0;
+        data.highlightCount = 0;
+        txn.roomSummary.set(data.serialize());
+        return data;
+    }
+
     writeHasFetchedMembers(value, txn) {
         const data = new SummaryData(this._data);
         data.hasFetchedMembers = value;
@@ -189,11 +230,15 @@ export class RoomSummary {
         return data;
     }
 
-	writeSync(roomResponse, membership, txn) {
+	writeSync(roomResponse, membership, isInitialSync, isTimelineOpen, txn) {
         // clear cloned flag, so cloneIfNeeded makes a copy and
         // this._data is not modified if any field is changed.
         this._data.cloned = false;
-		const data = applySyncResponse(this._data, roomResponse, membership);
+		const data = applySyncResponse(
+            this._data, roomResponse,
+            membership,
+            isInitialSync, isTimelineOpen,
+            this._ownUserId);
 		if (data !== this._data) {
             // need to think here how we want to persist
             // things like unread status (as read marker, or unread count)?
diff --git a/src/matrix/room/timeline/persistence/SyncWriter.js b/src/matrix/room/timeline/persistence/SyncWriter.js
index 5cbd6779..7dd53129 100644
--- a/src/matrix/room/timeline/persistence/SyncWriter.js
+++ b/src/matrix/room/timeline/persistence/SyncWriter.js
@@ -209,6 +209,10 @@ export class SyncWriter {
     afterSync(newLiveKey) {
         this._lastLiveKey = newLiveKey;
     }
+
+    get lastMessageKey() {
+        return this._lastLiveKey;
+    }
 }
 
 //import MemoryStorage from "../storage/memory/MemoryStorage.js";
diff --git a/src/ui/web/css/left-panel.css b/src/ui/web/css/left-panel.css
index 9400da4d..cde12111 100644
--- a/src/ui/web/css/left-panel.css
+++ b/src/ui/web/css/left-panel.css
@@ -35,10 +35,12 @@ limitations under the License.
     margin: 0;
     flex: 1 1 0;
     min-width: 0;
+    display: flex;
 }
 
-.LeftPanel .description > * {
+.LeftPanel .description > .name {
     overflow: hidden;
     white-space: nowrap;
     text-overflow: ellipsis;
+    flex: 1;
 }
diff --git a/src/ui/web/css/themes/element/theme.css b/src/ui/web/css/themes/element/theme.css
index 82754140..bf81bcd0 100644
--- a/src/ui/web/css/themes/element/theme.css
+++ b/src/ui/web/css/themes/element/theme.css
@@ -164,8 +164,30 @@ button.styled {
     margin-right: 10px;
 }
 
-.LeftPanel .description .last-message {
-    font-size: 0.8em;
+.LeftPanel .description {
+    align-items: baseline;
+}
+
+.LeftPanel .name.unread {
+    font-weight: 600;
+}
+
+.LeftPanel .badge {
+    min-width: 1.6rem;
+    height: 1.6rem;
+    border-radius: 1.6rem;
+    box-sizing: border-box;
+    padding: 0.1rem 0.3rem;
+    background-color: #61708b;
+    color: white;
+    font-weight: bold;
+    font-size: 1rem;
+    line-height: 1.4rem;
+    text-align: center;
+}
+
+.LeftPanel .badge.highlighted {
+    background-color: #ff4b55;
 }
 
 a {
@@ -301,6 +323,9 @@ ul.Timeline > li.continuation .profile {
     display: none;
 }
 
+ul.Timeline > li.continuation time {
+    display: none;
+}
 
 .message-container {
     padding: 1px 10px 0px 10px;
diff --git a/src/ui/web/session/RoomTile.js b/src/ui/web/session/RoomTile.js
index cde53b81..0486bfe2 100644
--- a/src/ui/web/session/RoomTile.js
+++ b/src/ui/web/session/RoomTile.js
@@ -21,7 +21,10 @@ export class RoomTile extends TemplateView {
     render(t, vm) {
         return t.li({"className": {"active": vm => vm.isOpen}}, [
             renderAvatar(t, vm, 32),
-            t.div({className: "description"}, t.div({className: "name"}, vm => vm.name))
+            t.div({className: "description"}, [
+                t.div({className: {"name": true, unread: vm => vm.isUnread}}, vm => vm.name),
+                t.div({className: {"badge": true, highlighted: vm => vm.isHighlighted, hidden: vm => !vm.badgeCount}}, vm => vm.badgeCount),
+            ])
         ]);
     }