diff --git a/IPython/html/services/notebooks/filenbmanager.py b/IPython/html/services/notebooks/filenbmanager.py
index c3b2c05..820e80a 100644
--- a/IPython/html/services/notebooks/filenbmanager.py
+++ b/IPython/html/services/notebooks/filenbmanager.py
@@ -18,6 +18,7 @@ Authors:
 #-----------------------------------------------------------------------------
 
 import io
+import locale
 import os
 import glob
 import shutil
@@ -31,6 +32,10 @@ from IPython.utils.py3compat import getcwd
 from IPython.utils import tz
 from IPython.html.utils import is_hidden, to_os_path
 
+def sort_key(item):
+    """Case-insensitive, locale aware sorting."""
+    return locale.strxfrm(item['name'].lower())
+
 #-----------------------------------------------------------------------------
 # Classes
 #-----------------------------------------------------------------------------
@@ -189,7 +194,7 @@ class FileNotebookManager(NotebookManager):
                 except IOError:
                     pass
                 dirs.append(model)
-        dirs = sorted(dirs, key=lambda item: item['name'])
+        dirs = sorted(dirs, key=sort_key)
         return dirs
 
     # TODO: Remove this after we create the contents web service and directories are
@@ -230,7 +235,7 @@ class FileNotebookManager(NotebookManager):
         path = path.strip('/')
         notebook_names = self.get_notebook_names(path)
         notebooks = [self.get_notebook(name, path, content=False) for name in notebook_names]
-        notebooks = sorted(notebooks, key=lambda item: item['name'])
+        notebooks = sorted(notebooks, key=sort_key)
         return notebooks
 
     def get_notebook(self, name, path='', content=True):
diff --git a/IPython/html/services/notebooks/tests/test_notebooks_api.py b/IPython/html/services/notebooks/tests/test_notebooks_api.py
index ce90d53..e348f1d 100644
--- a/IPython/html/services/notebooks/tests/test_notebooks_api.py
+++ b/IPython/html/services/notebooks/tests/test_notebooks_api.py
@@ -101,7 +101,10 @@ class APITest(NotebookTestBase):
                 ('foo', 'name with spaces'),
                 ('foo', u'unicodé'),
                 ('foo/bar', 'baz'),
-                (u'å b', u'ç d')
+                ('ordering', 'A'),
+                ('ordering', 'b'),
+                ('ordering', 'C'),
+                (u'å b', u'ç d'),
                ]
     hidden_dirs = ['.hidden', '__pycache__']
 
@@ -160,6 +163,11 @@ class APITest(NotebookTestBase):
         expected = [ u'a.ipynb', u'b.ipynb', u'name with spaces.ipynb', u'unicodé.ipynb']
         expected = { normalize('NFC', name) for name in expected }
         self.assertEqual(nbnames, expected)
+        
+        nbs = notebooks_only(self.nb_api.list('ordering').json())
+        nbnames = [n['name'] for n in nbs]
+        expected = ['A.ipynb', 'b.ipynb', 'C.ipynb']
+        self.assertEqual(nbnames, expected)
 
     def test_list_dirs(self):
         dirs = dirs_only(self.nb_api.list().json())