diff --git a/Gruntfile.js b/Gruntfile.js
index dd77b65b..c3d1581b 100644
--- a/Gruntfile.js
+++ b/Gruntfile.js
@@ -125,6 +125,7 @@ module.exports = function( grunt ) {
 						'js-tests/vendor/underscore.js',
 						'js-tests/vendor/backbone.js',
 						'js-tests/vendor/wp-util.js',
+						'js-tests/vendor/wp-editors.js',
 						'js-tests/vendor/mock-ajax.js',
 					],
 				}
diff --git a/dev.php b/dev.php
index 75da2a04..9f1da453 100644
--- a/dev.php
+++ b/dev.php
@@ -52,7 +52,7 @@
 
 		<section class="pullquote" style="padding: 20px; background: rgba(0,0,0,0.1);">
 			<p style="margin:0; padding: 0;">
-				<b>Content:</b> <?php echo esc_html( $content ); ?></br>
+				<b>Content:</b> <?php echo wpautop( wp_kses_post( $content ) ); ?></br>
 				<b>Source:</b> <?php echo esc_html( $attr['source'] ); ?></br>
 				<b>Image:</b> <?php echo wp_get_attachment_image( $attr['attachment'], array( 50, 50 ) ); ?></br>
 			</p>
diff --git a/js-tests/build/specs.js b/js-tests/build/specs.js
index b1291abd..2c45185a 100644
--- a/js-tests/build/specs.js
+++ b/js-tests/build/specs.js
@@ -250,10 +250,10 @@ describe( "MCE View Constructor", function() {
 	});
 
 	it( 'parses shortcode with content', function() {
-		var shortcode = MceViewConstructor.parseShortcodeString( '[test_shortcode attr="test value 1"]test content [/test_shortcode]')
+		var shortcode = MceViewConstructor.parseShortcodeString( '[test_shortcode attr="test value 1"]test content[/test_shortcode]')
 		expect( shortcode instanceof Shortcode ).toEqual( true );
 		expect( shortcode.get( 'attrs' ).findWhere( { attr: 'attr' }).get('value') ).toEqual( 'test value 1' );
-		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( 'test content ' );
+		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( 'test content' );
 	});
 
 	it( 'parses shortcode with dashes in name and attribute', function() {
@@ -263,10 +263,16 @@ describe( "MCE View Constructor", function() {
 	});
 
 	// https://github.com/fusioneng/Shortcake/issues/171
-	xit( 'parses shortcode with line breaks in inner content', function() {
-		var shortcode = MceViewConstructor.parseShortcodeString( "[test_shortcode]test \ncontent \r2 [/test_shortcode]")
+	it( 'parses shortcode with line breaks in inner content', function() {
+		var shortcode = MceViewConstructor.parseShortcodeString( "[test_shortcode]test \ntest \rtest[/test_shortcode]")
 		expect( shortcode instanceof Shortcode ).toEqual( true );
-		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( "test \ncontent \r2 " );
+		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( "test \ntest \rtest" );
+	} );
+
+	it( 'parses shortcode with paragraph and br tags in inner content', function() {
+		var shortcode = MceViewConstructor.parseShortcodeString( "[test_shortcode]<p>test</p><p>test<br/>test</p>[/test_shortcode]")
+		expect( shortcode instanceof Shortcode ).toEqual( true );
+		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( "test\n\ntest\ntest" );
 	} );
 
 	it( 'parses shortcode with unquoted attributes', function() {
@@ -658,13 +664,26 @@ var shortcodeViewConstructor = {
 
 		if ( matches[3] ) {
 			var inner_content = currentShortcode.get( 'inner_content' );
-			inner_content.set( 'value', matches[3] );
+			inner_content.set( 'value', this.unAutoP( matches[3] ) );
 		}
 
 		return currentShortcode;
 
 	},
 
+ 	/**
+	 * Strip 'p' and 'br' tags, replace with line breaks.
+	 * Reverse the effect of the WP editor autop functionality.
+	 */
+	unAutoP: function( content ) {
+		if ( switchEditors && switchEditors.pre_wpautop ) {
+			content = switchEditors.pre_wpautop( content );
+		}
+
+		return content;
+
+	},
+
 	// Backwards compatability for Pre WP 4.2.
 	View: {
 
diff --git a/js-tests/src/utils/mceViewConstructorSpec.js b/js-tests/src/utils/mceViewConstructorSpec.js
index 5ecbc666..94e981f1 100644
--- a/js-tests/src/utils/mceViewConstructorSpec.js
+++ b/js-tests/src/utils/mceViewConstructorSpec.js
@@ -121,10 +121,10 @@ describe( "MCE View Constructor", function() {
 	});
 
 	it( 'parses shortcode with content', function() {
-		var shortcode = MceViewConstructor.parseShortcodeString( '[test_shortcode attr="test value 1"]test content [/test_shortcode]')
+		var shortcode = MceViewConstructor.parseShortcodeString( '[test_shortcode attr="test value 1"]test content[/test_shortcode]')
 		expect( shortcode instanceof Shortcode ).toEqual( true );
 		expect( shortcode.get( 'attrs' ).findWhere( { attr: 'attr' }).get('value') ).toEqual( 'test value 1' );
-		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( 'test content ' );
+		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( 'test content' );
 	});
 
 	it( 'parses shortcode with dashes in name and attribute', function() {
@@ -134,10 +134,16 @@ describe( "MCE View Constructor", function() {
 	});
 
 	// https://github.com/fusioneng/Shortcake/issues/171
-	xit( 'parses shortcode with line breaks in inner content', function() {
-		var shortcode = MceViewConstructor.parseShortcodeString( "[test_shortcode]test \ncontent \r2 [/test_shortcode]")
+	it( 'parses shortcode with line breaks in inner content', function() {
+		var shortcode = MceViewConstructor.parseShortcodeString( "[test_shortcode]test \ntest \rtest[/test_shortcode]")
 		expect( shortcode instanceof Shortcode ).toEqual( true );
-		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( "test \ncontent \r2 " );
+		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( "test \ntest \rtest" );
+	} );
+
+	it( 'parses shortcode with paragraph and br tags in inner content', function() {
+		var shortcode = MceViewConstructor.parseShortcodeString( "[test_shortcode]<p>test</p><p>test<br/>test</p>[/test_shortcode]")
+		expect( shortcode instanceof Shortcode ).toEqual( true );
+		expect( shortcode.get( 'inner_content' ).get('value') ).toEqual( "test\n\ntest\ntest" );
 	} );
 
 	it( 'parses shortcode with unquoted attributes', function() {
diff --git a/js-tests/vendor/wp-editors.js b/js-tests/vendor/wp-editors.js
new file mode 100644
index 00000000..0b3e04b2
--- /dev/null
+++ b/js-tests/vendor/wp-editors.js
@@ -0,0 +1,324 @@
+/* global tinymce, tinyMCEPreInit, QTags, setUserSetting */
+
+window.switchEditors = {
+
+	switchto: function( el ) {
+		var aid = el.id,
+			l = aid.length,
+			id = aid.substr( 0, l - 5 ),
+			mode = aid.substr( l - 4 );
+
+		this.go( id, mode );
+	},
+
+	// mode can be 'html', 'tmce', or 'toggle'; 'html' is used for the 'Text' editor tab.
+	go: function( id, mode ) {
+		var t = this, ed, wrap_id, txtarea_el, iframe, editorHeight, toolbarHeight,
+			DOM = tinymce.DOM; //DOMUtils outside the editor iframe
+
+		id = id || 'content';
+		mode = mode || 'toggle';
+
+		ed = tinymce.get( id );
+		wrap_id = 'wp-' + id + '-wrap';
+		txtarea_el = DOM.get( id );
+
+		if ( 'toggle' === mode ) {
+			if ( ed && ! ed.isHidden() ) {
+				mode = 'html';
+			} else {
+				mode = 'tmce';
+			}
+		}
+
+		function getToolbarHeight() {
+			var node = DOM.select( '.mce-toolbar-grp', ed.getContainer() )[0],
+				height = node && node.clientHeight;
+
+			if ( height && height > 10 && height < 200 ) {
+				return parseInt( height, 10 );
+			}
+
+			return 30;
+		}
+
+		if ( 'tmce' === mode || 'tinymce' === mode ) {
+			if ( ed && ! ed.isHidden() ) {
+				return false;
+			}
+
+			if ( typeof( QTags ) !== 'undefined' ) {
+				QTags.closeAllTags( id );
+			}
+
+			editorHeight = txtarea_el ? parseInt( txtarea_el.style.height, 10 ) : 0;
+
+			if ( tinyMCEPreInit.mceInit[ id ] && tinyMCEPreInit.mceInit[ id ].wpautop ) {
+				txtarea_el.value = t.wpautop( txtarea_el.value );
+			}
+
+			if ( ed ) {
+				ed.show();
+
+				// No point resizing the iframe in iOS
+				if ( ! tinymce.Env.iOS && editorHeight ) {
+					toolbarHeight = getToolbarHeight();
+					editorHeight = editorHeight - toolbarHeight + 14;
+
+					// height cannot be under 50 or over 5000
+					if ( editorHeight > 50 && editorHeight < 5000 ) {
+						ed.theme.resizeTo( null, editorHeight );
+					}
+				}
+			} else {
+				tinymce.init( tinyMCEPreInit.mceInit[id] );
+			}
+
+			DOM.removeClass( wrap_id, 'html-active' );
+			DOM.addClass( wrap_id, 'tmce-active' );
+			DOM.setAttrib( txtarea_el, 'aria-hidden', true );
+			setUserSetting( 'editor', 'tinymce' );
+
+		} else if ( 'html' === mode ) {
+
+			if ( ed && ed.isHidden() ) {
+				return false;
+			}
+
+			if ( ed ) {
+				if ( ! tinymce.Env.iOS ) {
+					iframe = DOM.get( id + '_ifr' );
+					editorHeight = iframe ? parseInt( iframe.style.height, 10 ) : 0;
+
+					if ( editorHeight ) {
+						toolbarHeight = getToolbarHeight();
+						editorHeight = editorHeight + toolbarHeight - 14;
+
+						// height cannot be under 50 or over 5000
+						if ( editorHeight > 50 && editorHeight < 5000 ) {
+							txtarea_el.style.height = editorHeight + 'px';
+						}
+					}
+				}
+
+				ed.hide();
+			} else {
+				// The TinyMCE instance doesn't exist, run the content through 'pre_wpautop()' and show the textarea
+				if ( tinyMCEPreInit.mceInit[ id ] && tinyMCEPreInit.mceInit[ id ].wpautop ) {
+					txtarea_el.value = t.pre_wpautop( txtarea_el.value );
+				}
+
+				DOM.setStyles( txtarea_el, {'display': '', 'visibility': ''} );
+			}
+
+			DOM.removeClass( wrap_id, 'tmce-active' );
+			DOM.addClass( wrap_id, 'html-active' );
+			DOM.setAttrib( txtarea_el, 'aria-hidden', false );
+			setUserSetting( 'editor', 'html' );
+		}
+		return false;
+	},
+
+	_wp_Nop: function( content ) {
+		var blocklist1, blocklist2,
+			preserve_linebreaks = false,
+			preserve_br = false;
+
+		// Protect pre|script tags
+		if ( content.indexOf( '<pre' ) !== -1 || content.indexOf( '<script' ) !== -1 ) {
+			preserve_linebreaks = true;
+			content = content.replace( /<(pre|script)[^>]*>[\s\S]+?<\/\1>/g, function( a ) {
+				a = a.replace( /<br ?\/?>(\r\n|\n)?/g, '<wp-line-break>' );
+				a = a.replace( /<\/?p( [^>]*)?>(\r\n|\n)?/g, '<wp-line-break>' );
+				return a.replace( /\r?\n/g, '<wp-line-break>' );
+			});
+		}
+
+		// keep <br> tags inside captions and remove line breaks
+		if ( content.indexOf( '[caption' ) !== -1 ) {
+			preserve_br = true;
+			content = content.replace( /\[caption[\s\S]+?\[\/caption\]/g, function( a ) {
+				return a.replace( /<br([^>]*)>/g, '<wp-temp-br$1>' ).replace( /[\r\n\t]+/, '' );
+			});
+		}
+
+		// Pretty it up for the source editor
+		blocklist1 = 'blockquote|ul|ol|li|table|thead|tbody|tfoot|tr|th|td|div|h[1-6]|p|fieldset';
+		content = content.replace( new RegExp( '\\s*</(' + blocklist1 + ')>\\s*', 'g' ), '</$1>\n' );
+		content = content.replace( new RegExp( '\\s*<((?:' + blocklist1 + ')(?: [^>]*)?)>', 'g' ), '\n<$1>' );
+
+		// Mark </p> if it has any attributes.
+		content = content.replace( /(<p [^>]+>.*?)<\/p>/g, '$1</p#>' );
+
+		// Separate <div> containing <p>
+		content = content.replace( /<div( [^>]*)?>\s*<p>/gi, '<div$1>\n\n' );
+
+		// Remove <p> and <br />
+		content = content.replace( /\s*<p>/gi, '' );
+		content = content.replace( /\s*<\/p>\s*/gi, '\n\n' );
+		content = content.replace( /\n[\s\u00a0]+\n/g, '\n\n' );
+		content = content.replace( /\s*<br ?\/?>\s*/gi, '\n' );
+
+		// Fix some block element newline issues
+		content = content.replace( /\s*<div/g, '\n<div' );
+		content = content.replace( /<\/div>\s*/g, '</div>\n' );
+		content = content.replace( /\s*\[caption([^\[]+)\[\/caption\]\s*/gi, '\n\n[caption$1[/caption]\n\n' );
+		content = content.replace( /caption\]\n\n+\[caption/g, 'caption]\n\n[caption' );
+
+		blocklist2 = 'blockquote|ul|ol|li|table|thead|tbody|tfoot|tr|th|td|h[1-6]|pre|fieldset';
+		content = content.replace( new RegExp('\\s*<((?:' + blocklist2 + ')(?: [^>]*)?)\\s*>', 'g' ), '\n<$1>' );
+		content = content.replace( new RegExp('\\s*</(' + blocklist2 + ')>\\s*', 'g' ), '</$1>\n' );
+		content = content.replace( /<li([^>]*)>/g, '\t<li$1>' );
+
+		if ( content.indexOf( '<option' ) !== -1 ) {
+			content = content.replace( /\s*<option/g, '\n<option' );
+			content = content.replace( /\s*<\/select>/g, '\n</select>' );
+		}
+
+		if ( content.indexOf( '<hr' ) !== -1 ) {
+			content = content.replace( /\s*<hr( [^>]*)?>\s*/g, '\n\n<hr$1>\n\n' );
+		}
+
+		if ( content.indexOf( '<object' ) !== -1 ) {
+			content = content.replace( /<object[\s\S]+?<\/object>/g, function( a ) {
+				return a.replace( /[\r\n]+/g, '' );
+			});
+		}
+
+		// Unmark special paragraph closing tags
+		content = content.replace( /<\/p#>/g, '</p>\n' );
+		content = content.replace( /\s*(<p [^>]+>[\s\S]*?<\/p>)/g, '\n$1' );
+
+		// Trim whitespace
+		content = content.replace( /^\s+/, '' );
+		content = content.replace( /[\s\u00a0]+$/, '' );
+
+		// put back the line breaks in pre|script
+		if ( preserve_linebreaks ) {
+			content = content.replace( /<wp-line-break>/g, '\n' );
+		}
+
+		// and the <br> tags in captions
+		if ( preserve_br ) {
+			content = content.replace( /<wp-temp-br([^>]*)>/g, '<br$1>' );
+		}
+
+		return content;
+	},
+
+	_wp_Autop: function(pee) {
+		var preserve_linebreaks = false,
+			preserve_br = false,
+			blocklist = 'table|thead|tfoot|caption|col|colgroup|tbody|tr|td|th|div|dl|dd|dt|ul|ol|li|pre' +
+				'|form|map|area|blockquote|address|math|style|p|h[1-6]|hr|fieldset|legend|section' +
+				'|article|aside|hgroup|header|footer|nav|figure|details|menu|summary';
+
+		if ( pee.indexOf( '<object' ) !== -1 ) {
+			pee = pee.replace( /<object[\s\S]+?<\/object>/g, function( a ) {
+				return a.replace( /[\r\n]+/g, '' );
+			});
+		}
+
+		pee = pee.replace( /<[^<>]+>/g, function( a ){
+			return a.replace( /[\r\n]+/g, ' ' );
+		});
+
+		// Protect pre|script tags
+		if ( pee.indexOf( '<pre' ) !== -1 || pee.indexOf( '<script' ) !== -1 ) {
+			preserve_linebreaks = true;
+			pee = pee.replace( /<(pre|script)[^>]*>[\s\S]+?<\/\1>/g, function( a ) {
+				return a.replace( /(\r\n|\n)/g, '<wp-line-break>' );
+			});
+		}
+
+		// keep <br> tags inside captions and convert line breaks
+		if ( pee.indexOf( '[caption' ) !== -1 ) {
+			preserve_br = true;
+			pee = pee.replace( /\[caption[\s\S]+?\[\/caption\]/g, function( a ) {
+				// keep existing <br>
+				a = a.replace( /<br([^>]*)>/g, '<wp-temp-br$1>' );
+				// no line breaks inside HTML tags
+				a = a.replace( /<[a-zA-Z0-9]+( [^<>]+)?>/g, function( b ) {
+					return b.replace( /[\r\n\t]+/, ' ' );
+				});
+				// convert remaining line breaks to <br>
+				return a.replace( /\s*\n\s*/g, '<wp-temp-br />' );
+			});
+		}
+
+		pee = pee + '\n\n';
+		pee = pee.replace( /<br \/>\s*<br \/>/gi, '\n\n' );
+		pee = pee.replace( new RegExp( '(<(?:' + blocklist + ')(?: [^>]*)?>)', 'gi' ), '\n$1' );
+		pee = pee.replace( new RegExp( '(</(?:' + blocklist + ')>)', 'gi' ), '$1\n\n' );
+		pee = pee.replace( /<hr( [^>]*)?>/gi, '<hr$1>\n\n' ); // hr is self closing block element
+		pee = pee.replace( /\s*<option/gi, '<option' ); // No <p> or <br> around <option>
+		pee = pee.replace( /<\/option>\s*/gi, '</option>' );
+		pee = pee.replace( /\r\n|\r/g, '\n' );
+		pee = pee.replace( /\n\s*\n+/g, '\n\n' );
+		pee = pee.replace( /([\s\S]+?)\n\n/g, '<p>$1</p>\n' );
+		pee = pee.replace( /<p>\s*?<\/p>/gi, '');
+		pee = pee.replace( new RegExp( '<p>\\s*(</?(?:' + blocklist + ')(?: [^>]*)?>)\\s*</p>', 'gi' ), '$1' );
+		pee = pee.replace( /<p>(<li.+?)<\/p>/gi, '$1');
+		pee = pee.replace( /<p>\s*<blockquote([^>]*)>/gi, '<blockquote$1><p>');
+		pee = pee.replace( /<\/blockquote>\s*<\/p>/gi, '</p></blockquote>');
+		pee = pee.replace( new RegExp( '<p>\\s*(</?(?:' + blocklist + ')(?: [^>]*)?>)', 'gi' ), '$1' );
+		pee = pee.replace( new RegExp( '(</?(?:' + blocklist + ')(?: [^>]*)?>)\\s*</p>', 'gi' ), '$1' );
+		pee = pee.replace( /\s*\n/gi, '<br />\n');
+		pee = pee.replace( new RegExp( '(</?(?:' + blocklist + ')[^>]*>)\\s*<br />', 'gi' ), '$1' );
+		pee = pee.replace( /<br \/>(\s*<\/?(?:p|li|div|dl|dd|dt|th|pre|td|ul|ol)>)/gi, '$1' );
+		pee = pee.replace( /(?:<p>|<br ?\/?>)*\s*\[caption([^\[]+)\[\/caption\]\s*(?:<\/p>|<br ?\/?>)*/gi, '[caption$1[/caption]' );
+
+		pee = pee.replace( /(<(?:div|th|td|form|fieldset|dd)[^>]*>)(.*?)<\/p>/g, function( a, b, c ) {
+			if ( c.match( /<p( [^>]*)?>/ ) ) {
+				return a;
+			}
+
+			return b + '<p>' + c + '</p>';
+		});
+
+		// put back the line breaks in pre|script
+		if ( preserve_linebreaks ) {
+			pee = pee.replace( /<wp-line-break>/g, '\n' );
+		}
+
+		if ( preserve_br ) {
+			pee = pee.replace( /<wp-temp-br([^>]*)>/g, '<br$1>' );
+		}
+
+		return pee;
+	},
+
+	pre_wpautop: function( content ) {
+		var t = this, o = { o: t, data: content, unfiltered: content },
+			q = typeof( jQuery ) !== 'undefined';
+
+		if ( q ) {
+			jQuery( 'body' ).trigger( 'beforePreWpautop', [ o ] );
+		}
+
+		o.data = t._wp_Nop( o.data );
+
+		if ( q ) {
+			jQuery('body').trigger('afterPreWpautop', [ o ] );
+		}
+
+		return o.data;
+	},
+
+	wpautop: function( pee ) {
+		var t = this, o = { o: t, data: pee, unfiltered: pee },
+			q = typeof( jQuery ) !== 'undefined';
+
+		if ( q ) {
+			jQuery( 'body' ).trigger('beforeWpautop', [ o ] );
+		}
+
+		o.data = t._wp_Autop( o.data );
+
+		if ( q ) {
+			jQuery( 'body' ).trigger('afterWpautop', [ o ] );
+		}
+
+		return o.data;
+	}
+};
diff --git a/js/build/shortcode-ui.js b/js/build/shortcode-ui.js
index cd9d2739..f62fef7e 100644
--- a/js/build/shortcode-ui.js
+++ b/js/build/shortcode-ui.js
@@ -448,13 +448,26 @@ var shortcodeViewConstructor = {
 
 		if ( matches[3] ) {
 			var inner_content = currentShortcode.get( 'inner_content' );
-			inner_content.set( 'value', matches[3] );
+			inner_content.set( 'value', this.unAutoP( matches[3] ) );
 		}
 
 		return currentShortcode;
 
 	},
 
+ 	/**
+	 * Strip 'p' and 'br' tags, replace with line breaks.
+	 * Reverse the effect of the WP editor autop functionality.
+	 */
+	unAutoP: function( content ) {
+		if ( switchEditors && switchEditors.pre_wpautop ) {
+			content = switchEditors.pre_wpautop( content );
+		}
+
+		return content;
+
+	},
+
 	// Backwards compatability for Pre WP 4.2.
 	View: {
 
diff --git a/js/src/utils/shortcode-view-constructor.js b/js/src/utils/shortcode-view-constructor.js
index 961c0d3e..6876d486 100644
--- a/js/src/utils/shortcode-view-constructor.js
+++ b/js/src/utils/shortcode-view-constructor.js
@@ -184,13 +184,26 @@ var shortcodeViewConstructor = {
 
 		if ( matches[3] ) {
 			var inner_content = currentShortcode.get( 'inner_content' );
-			inner_content.set( 'value', matches[3] );
+			inner_content.set( 'value', this.unAutoP( matches[3] ) );
 		}
 
 		return currentShortcode;
 
 	},
 
+ 	/**
+	 * Strip 'p' and 'br' tags, replace with line breaks.
+	 * Reverse the effect of the WP editor autop functionality.
+	 */
+	unAutoP: function( content ) {
+		if ( switchEditors && switchEditors.pre_wpautop ) {
+			content = switchEditors.pre_wpautop( content );
+		}
+
+		return content;
+
+	},
+
 	// Backwards compatability for Pre WP 4.2.
 	View: {