diff --git a/src/cdk/bidi/bidi.md b/src/cdk/bidi/bidi.md
index 272c92e1b466..3c79bdf5709d 100644
--- a/src/cdk/bidi/bidi.md
+++ b/src/cdk/bidi/bidi.md
@@ -1,34 +1,34 @@
 The `bidi` package provides a common system for components to get and respond to change in the
-application's LTR/RTL layout direction. 
+application's LTR/RTL layout direction.
 
 ### Directionality
- 
+
 When including the CDK's `BidiModule`, components can inject `Directionality` to get the current
 text direction (RTL or LTR);
 
 #### Example
 ```ts
-@Component({ ... }) 
+@Component({ ... })
 export class MyWidget implements OnDestroy {
 
   /** Whether the widget is in RTL mode or not. */
   private isRtl: boolean;
-  
+
   /** Subscription to the Directionality change EventEmitter. */
-  private _dirChangeSubscription = Subscription.EMPTY;  
-  
+  private _dirChangeSubscription = Subscription.EMPTY;
+
   constructor(dir: Directionality) {
     this.isRtl = dir.value === 'rtl';
-    
+
     this._dirChangeSubscription = dir.change.subscribe(() => {
       this.flipDirection();
     });
   }
-  
+
   ngOnDestroy() {
     this._dirChangeSubscription.unsubscribe();
   }
-}  
+}
 ```
 
 ### The `Dir` directive
@@ -36,3 +36,11 @@ The `BidiModule` also includes a directive that matches any elements with a `dir
 directive has the same API as Directionality and provides itself _as_ `Directionality`. By doing
 this, any component that injects `Directionality` will get the closest ancestor layout direction
 context.
+
+### Interpreting the `auto` value
+The CDK also supports the native `auto` value for the `dir` attribute, however there's a difference
+in how it is interpreted. Some parts of the CDK, like overlays and keyboard navigation, need to know
+if the element is in an RTL or LTR layout in order to work correctly. For performance reasons, we
+resolve the `auto` value by looking at the browser's language (`navigator.language`) and matching
+it against a set of known RTL locales. This differs from the way the browser handles it, which is
+based on the text content of the element.
diff --git a/src/cdk/bidi/dir.ts b/src/cdk/bidi/dir.ts
index 1ce6b20802a3..249fab27b467 100644
--- a/src/cdk/bidi/dir.ts
+++ b/src/cdk/bidi/dir.ts
@@ -8,7 +8,7 @@
 
 import {Directive, Output, Input, EventEmitter, AfterContentInit, OnDestroy} from '@angular/core';
 
-import {Direction, Directionality} from './directionality';
+import {Direction, Directionality, _resolveDirectionality} from './directionality';
 
 /**
  * Directive to listen for changes of direction of part of the DOM.
@@ -40,14 +40,16 @@ export class Dir implements Directionality, AfterContentInit, OnDestroy {
   get dir(): Direction {
     return this._dir;
   }
-  set dir(value: Direction) {
-    const old = this._dir;
-    const normalizedValue = value ? value.toLowerCase() : value;
+  set dir(value: Direction | 'auto') {
+    const previousValue = this._dir;
 
+    // Note: `_resolveDirectionality` resolves the language based on the browser's language,
+    // whereas the browser does it based on the content of the element. Since doing so based
+    // on the content can be expensive, for now we're doing the simpler matching.
+    this._dir = _resolveDirectionality(value);
     this._rawDir = value;
-    this._dir = normalizedValue === 'ltr' || normalizedValue === 'rtl' ? normalizedValue : 'ltr';
 
-    if (old !== this._dir && this._isInitialized) {
+    if (previousValue !== this._dir && this._isInitialized) {
       this.change.emit(this._dir);
     }
   }
diff --git a/src/cdk/bidi/directionality.ts b/src/cdk/bidi/directionality.ts
index 91d0fa358443..3eda68cfc6b1 100644
--- a/src/cdk/bidi/directionality.ts
+++ b/src/cdk/bidi/directionality.ts
@@ -11,6 +11,21 @@ import {DIR_DOCUMENT} from './dir-document-token';
 
 export type Direction = 'ltr' | 'rtl';
 
+/** Regex that matches locales with an RTL script. Taken from `goog.i18n.bidi.isRtlLanguage`. */
+const RTL_LOCALE_PATTERN =
+  /^(ar|ckb|dv|he|iw|fa|nqo|ps|sd|ug|ur|yi|.*[-_](Adlm|Arab|Hebr|Nkoo|Rohg|Thaa))(?!.*[-_](Latn|Cyrl)($|-|_))($|-|_)/i;
+
+/** Resolves a string value to a specific direction. */
+export function _resolveDirectionality(rawValue: string): Direction {
+  const value = rawValue?.toLowerCase() || '';
+
+  if (value === 'auto' && typeof navigator !== 'undefined' && navigator?.language) {
+    return RTL_LOCALE_PATTERN.test(navigator.language) ? 'rtl' : 'ltr';
+  }
+
+  return value === 'rtl' ? 'rtl' : 'ltr';
+}
+
 /**
  * The directionality (LTR / RTL) context for the application (or a subtree of it).
  * Exposes the current direction and a stream of direction changes.
@@ -25,14 +40,9 @@ export class Directionality implements OnDestroy {
 
   constructor(@Optional() @Inject(DIR_DOCUMENT) _document?: any) {
     if (_document) {
-      // TODO: handle 'auto' value -
-      // We still need to account for dir="auto".
-      // It looks like HTMLElemenet.dir is also "auto" when that's set to the attribute,
-      // but getComputedStyle return either "ltr" or "rtl". avoiding getComputedStyle for now
       const bodyDir = _document.body ? _document.body.dir : null;
       const htmlDir = _document.documentElement ? _document.documentElement.dir : null;
-      const value = bodyDir || htmlDir;
-      this.value = value === 'ltr' || value === 'rtl' ? value : 'ltr';
+      this.value = _resolveDirectionality(bodyDir || htmlDir || 'ltr');
     }
   }
 
diff --git a/tools/public_api_guard/cdk/bidi.md b/tools/public_api_guard/cdk/bidi.md
index fb394856c8e3..3529507f406e 100644
--- a/tools/public_api_guard/cdk/bidi.md
+++ b/tools/public_api_guard/cdk/bidi.md
@@ -24,7 +24,7 @@ export class BidiModule {
 export class Dir implements Directionality, AfterContentInit, OnDestroy {
     readonly change: EventEmitter<Direction>;
     get dir(): Direction;
-    set dir(value: Direction);
+    set dir(value: Direction | 'auto');
     ngAfterContentInit(): void;
     // (undocumented)
     ngOnDestroy(): void;