diff --git a/specification/server_server_api.rst b/specification/server_server_api.rst
index 5203c5e0..d719bfaa 100644
--- a/specification/server_server_api.rst
+++ b/specification/server_server_api.rst
@@ -617,11 +617,137 @@ is at the top)::
 Suppose E3 and E4 are both ``m.room.name`` events which set the name of the
 room. What should the name of the room be at E5?
 
-Servers should follow the following recursively-defined algorithm to determine
-the room state at a given point on the DAG.
+Servers should follow one of the following recursively-defined algorithms,
+depending on the room version, to determine the room state at a given point on
+the DAG.
 
-State resolution algorithm
-~~~~~~~~~~~~~~~~~~~~~~~~~~
+State resolution algorithm for version 2 rooms
+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+
+The room state :math:`S'(E)` after an event :math:`E` is defined in terms of
+the room state :math:`S(E)` before :math:`E`, and depends on whether
+:math:`E` is a state event or a message event:
+
+* If :math:`E` is a message event, then :math:`S'(E) = S(E)`.
+
+* If :math:`E` is a state event, then :math:`S'(E)` is :math:`S(E)`, except
+  that its entry corresponding to :math:`E`'s ``event_type`` and ``state_key``
+  is replaced by :math:`E`'s ``event_id``.
+
+The room state :math:`S(E)` before :math:`E` is the *resolution* of the set of
+states :math:`\{ S'(E_1), S'(E_2), … \}` consisting of the states after each of
+:math:`E`'s ``prev_event``\s :math:`\{ E_1, E_2, … \}`, where the resolution of
+a set of states is given in the algorithm below.
+
+Definitions
++++++++++++
+
+The state resolution algorithm for version 2 rooms uses the following
+definitions, given the set of room states :math:`\{ S_1, S_2, \ldots \}`:
+
+Power events
+  A *power event* is a state event with type ``m.room.power_levels`` or
+  ``m.room.join_rules``, or a state event with type ``m.room.member`` where the
+  ``membership`` is ``leave`` or ``ban`` and the ``sender`` does not match the
+  ``state_key``. The idea behind this is that power events are events that have
+  may remove someone's ability to do something in the room.
+
+Unconflicted state map and conflicted state set
+  The *unconflicted state map* is the state where the value of each key exists
+  and is the same in each state :math:`S_i`.  The *conflicted state set* is the
+  set of all other state events. Note that the unconflicted state map only has
+  one event per ``(event_type, state_key)``, whereas the conflicted state set
+  may have multiple events.
+
+Auth difference
+  The *auth difference* is calculated by first calculating the full auth chain
+  for each state :math:`S_i`, that is the union of the auth chains for each
+  event in :math:`S_i`, and then taking every event that doesn't appear in
+  every auth chain. If :math:`C_i` is the full auth chain of :math:`S_i`, then
+  the auth difference is :math:`\cup C_i - \cap C_i`.
+
+Full conflicted set
+  The *full conflicted set* is the union of the conflicted state set and the
+  auth difference.
+
+Reverse topological power ordering
+  The *reverse topological power ordering* of a set of events is the
+  lexicographically smallest topological ordering based on the DAG formed by
+  auth events. The reverse topological power ordering is ordered from earliest
+  event to latest. For comparing two topological orderings to determine which
+  is the lexicographically smallest, the following comparison relation on
+  events is used: for events :math:`x` and :math:`y`, :math:`x<y` if
+
+  1. :math:`x`'s sender has *greater* power level than :math:`y`'s sender,
+     when looking at their respective ``auth_event``\s; or
+  2. the senders have the same power level, but :math:`x`'s
+     ``origin_server_ts`` is *less* than :math:`y`'s ``origin_server_ts``; or
+  3. the senders have the same power level and the events have the same
+     ``origin_server_ts``, but :math:`x`'s ``event_id`` is *less* than
+     :math:`y`'s ``event_id``.
+
+  The reverse topological power ordering can be found by sorting the events
+  using Kahn's algorithm for topological sorting, and at each step selecting,
+  among all the candidate vertices, the smallest vertex using the above
+  comparison relation.
+
+Mainline ordering
+  Given an ``m.room.power_levels`` event :math:`P`, the *mainline of* :math:`P`
+  is the list of events generated by starting with :math:`P` and recursively
+  taking the ``m.room.power_levels`` events from the ``auth_events``, ordered
+  such that :math:`P` is last. Given another event :math:`e`, the *closest
+  mainline event to* :math:`e` is the first event encountered in the mainline
+  when iteratively descending through the ``m.room.power_levels`` events in the
+  ``auth_events`` starting at :math:`e`. If no mainline event is encountered
+  when iteratively descending through the ``m.room.power_levels`` events, then
+  the closest mainline event to :math:`e` can be considered to be a dummy event
+  that is before any other event in the mainline of :math:`P` for the purposes
+  of condition 1 below.
+
+  The *mainline ordering based on* :math:`P` of a set of events is the
+  ordering, from smallest to largest, using the following comparision relation
+  on events: for events :math:`x` and :math:`y`, :math:`x<y` if
+
+  1. the closest mainline event to :math:`x` appears *before* the closest
+     mainline event to :math:`y`; or
+  2. the closest mainline events are the same, but :math:`x`\'s
+     ``origin_server_ts`` is *less* than :math:`y`\'s ``origin_server_ts``; or
+  3. the closest mainline events are the same and the events have the same
+     ``origin_server_ts``, but :math:`x`\'s ``event_id`` is *less* than
+     :math:`y`\'s ``event_id``.
+
+Iterative auth checks
+  The *iterative auth checks algorithm* takes as input an initial room state
+  and a sorted list of state events, and constructs a new room state by
+  iterating through the event list and applying the state event to the room
+  state if the state event is allowed by the `authorization rules`_. If the
+  state event is not allowed by the authorization rules, then the event is
+  ignored. If a ``(event_type, state_key)`` key that is required for checking
+  the authorization rules is not present in the state, then the appropriate
+  state event from the event's ``auth_events`` is used.
+
+Algorithm
++++++++++
+
+The *resolution* of a set of states is obtained as follows:
+
+1. Take all *power events* and any events in their auth chains, recursively,
+   that appear in the *full conflicted set* and order them by the *reverse
+   topological power ordering*.
+2. Apply the *iterative auth checks algorithm* on the *unconflicted state map*
+   and the list of events from the previous step to get a partially resolved
+   state.
+3. Take all remaining events that weren't picked in step 1 and order them by
+   the mainline ordering based on the power level in the partially resolved
+   state obtained in step 2.
+4. Apply the *iterative auth checks algorithm* on the partial resolved
+   state and the list of events from the previous step.
+5. Update the result by replacing any event with the event with the same key
+   from the *unconflicted state map*, if such an event exists, to get the final
+   resolved state.
+
+State resolution algorithm for version 1 rooms
+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
 
 .. WARNING::
   This section documents the state resolution algorithm as implemented by