diff --git a/moto/autoscaling/models.py b/moto/autoscaling/models.py
index 6d5fe6ace..cb07c4207 100644
--- a/moto/autoscaling/models.py
+++ b/moto/autoscaling/models.py
@@ -106,7 +106,8 @@ class FakeAutoScalingGroup(object):
             reservation = ec2_backend.add_instances(
                 self.launch_config.image_id,
                 count_needed,
-                self.launch_config.user_data
+                self.launch_config.user_data,
+                self.launch_config.security_groups,
             )
             for instance in reservation.instances:
                 instance.autoscaling_group = self
diff --git a/moto/ec2/models.py b/moto/ec2/models.py
index 5b1f5a1d6..ff17aab85 100644
--- a/moto/ec2/models.py
+++ b/moto/ec2/models.py
@@ -30,12 +30,13 @@ class InstanceState(object):
 
 
 class Instance(BotoInstance):
-    def __init__(self, image_id, user_data):
+    def __init__(self, image_id, user_data, security_groups):
         super(Instance, self).__init__()
         self.id = random_instance_id()
         self.image_id = image_id
         self._state = InstanceState("running", 16)
         self.user_data = user_data
+        self.security_groups = security_groups
 
     def start(self, *args, **kwargs):
         self._state.name = "running"
@@ -69,13 +70,16 @@ class InstanceBackend(object):
             if instance.id == instance_id:
                 return instance
 
-    def add_instances(self, image_id, count, user_data):
+    def add_instances(self, image_id, count, user_data, security_group_names):
         new_reservation = Reservation()
         new_reservation.id = random_reservation_id()
+
+        security_groups = [self.get_security_group_from_name(name) for name in security_group_names]
         for index in range(count):
             new_instance = Instance(
                 image_id,
                 user_data,
+                security_groups,
             )
             new_reservation.instances.append(new_instance)
         self.reservations[new_reservation.id] = new_reservation
@@ -369,7 +373,7 @@ class SecurityGroupBackend(object):
                     return vpc.pop(group_id)
         elif name:
             # Group Name.  Has to be in standard EC2, VPC needs to be identified by group_id
-            group = self.get_security_group_from_name(name, None)
+            group = self.get_security_group_from_name(name)
             if group:
                 return self.groups[None].pop(group.id)
 
@@ -381,9 +385,7 @@ class SecurityGroupBackend(object):
             if group.id == group_id:
                 return group
 
-
-
-    def get_security_group_from_name(self, name, vpc_id):
+    def get_security_group_from_name(self, name, vpc_id=None):
         for group_id, group in self.groups[vpc_id].iteritems():
             if group.name == name:
                 return group
@@ -441,7 +443,6 @@ class SecurityGroupBackend(object):
         elif group_id:
             group = self.get_security_group_from_id(group_id)
 
-
         source_groups = []
         for source_group_name in source_group_names:
             source_group = self.get_security_group_from_name(source_group_name, vpc_id)
@@ -627,12 +628,12 @@ class SpotInstanceRequest(object):
         self.security_groups = []
         if security_groups:
             for group_name in security_groups:
-                group = ec2_backend.get_security_group_from_name(group_name, None)
+                group = ec2_backend.get_security_group_from_name(group_name)
                 if group:
                     self.security_groups.append(group)
         else:
             # If not security groups, add the default
-            default_group = ec2_backend.get_security_group_from_name("default", None)
+            default_group = ec2_backend.get_security_group_from_name("default")
             self.security_groups.append(default_group)
 
 
diff --git a/moto/ec2/responses/instances.py b/moto/ec2/responses/instances.py
index 62f406b07..13b23fd3f 100644
--- a/moto/ec2/responses/instances.py
+++ b/moto/ec2/responses/instances.py
@@ -8,6 +8,9 @@ from moto.ec2.exceptions import InvalidIdError
 
 
 class InstanceResponse(BaseResponse):
+    def _get_multi_param(self, param_prefix):
+        return [value[0] for key, value in self.querystring.items() if key.startswith(param_prefix)]
+
     def describe_instances(self):
         instance_ids = instance_ids_from_querystring(self.querystring)
         if instance_ids:
@@ -29,7 +32,8 @@ class InstanceResponse(BaseResponse):
         min_count = int(self.querystring.get('MinCount', ['1'])[0])
         image_id = self.querystring.get('ImageId')[0]
         user_data = self.querystring.get('UserData')
-        new_reservation = ec2_backend.add_instances(image_id, min_count, user_data)
+        security_group_names = self._get_multi_param('SecurityGroup')
+        new_reservation = ec2_backend.add_instances(image_id, min_count, user_data, security_group_names)
         template = Template(EC2_RUN_INSTANCES)
         return template.render(reservation=new_reservation)
 
@@ -119,10 +123,12 @@ EC2_RUN_INSTANCES = """<RunInstancesResponse xmlns="http://ec2.amazonaws.com/doc
           </monitoring>
           <sourceDestCheck>true</sourceDestCheck>
           <groupSet>
+             {% for group in instance.security_groups %}
              <item>
-                <groupId>sg-245f6a01</groupId>
-                <groupName>default</groupName>
+                <groupId>{{ group.id }}</groupId>
+                <groupName>{{ group.name }}</groupName>
              </item>
+             {% endfor %}
           </groupSet>
           <virtualizationType>paravirtual</virtualizationType>
           <clientToken/>
@@ -140,12 +146,7 @@ EC2_DESCRIBE_INSTANCES = """<DescribeInstancesResponse xmlns='http://ec2.amazona
           <item>
             <reservationId>{{ reservation.id }}</reservationId>
             <ownerId>111122223333</ownerId>
-            <groupSet>
-              <item>
-                <groupId>sg-1a2b3c4d</groupId>
-                <groupName>my-security-group</groupName>
-              </item>
-            </groupSet>
+            <groupSet></groupSet>
             <instancesSet>
                 {% for instance in reservation.instances %}
                   <item>
@@ -178,10 +179,12 @@ EC2_DESCRIBE_INSTANCES = """<DescribeInstancesResponse xmlns='http://ec2.amazona
                     <ipAddress>46.51.219.63</ipAddress>
                     <sourceDestCheck>true</sourceDestCheck>
                     <groupSet>
+                      {% for group in instance.security_groups %}
                       <item>
-                        <groupId>sg-1a2b3c4d</groupId>
-                        <groupName>my-security-group</groupName>
+                        <groupId>{{ group.id }}</groupId>
+                        <groupName>{{ group.name }}</groupName>
                       </item>
+                      {% endfor %}
                     </groupSet>
                     <architecture>x86_64</architecture>
                     <rootDeviceType>ebs</rootDeviceType>
diff --git a/tests/test_ec2/test_instances.py b/tests/test_ec2/test_instances.py
index d2c386555..9b4cb601a 100644
--- a/tests/test_ec2/test_instances.py
+++ b/tests/test_ec2/test_instances.py
@@ -170,3 +170,15 @@ def test_user_data_with_run_instance():
     instance_attribute.should.be.a(InstanceAttribute)
     decoded_user_data = base64.decodestring(instance_attribute.get("userData"))
     decoded_user_data.should.equal("some user data")
+
+
+@mock_ec2
+def test_run_instance_with_security_group():
+    conn = boto.connect_ec2('the_key', 'the_secret')
+    group = conn.create_security_group('group1', "some description")
+
+    reservation = conn.run_instances('ami-1234abcd', security_groups=['group1'])
+    instance = reservation.instances[0]
+
+    instance.groups[0].id.should.equal(group.id)
+    instance.groups[0].name.should.equal("group1")