diff --git a/packages/roosterjs-content-model-plugins/lib/paste/Markdown/convertPastedTextToMarkdown.ts b/packages/roosterjs-content-model-plugins/lib/paste/Markdown/convertPastedTextToMarkdown.ts
new file mode 100644
index 000000000000..c74187d683a5
--- /dev/null
+++ b/packages/roosterjs-content-model-plugins/lib/paste/Markdown/convertPastedTextToMarkdown.ts
@@ -0,0 +1,79 @@
+import { contentModelToDom, createModelToDomContext } from 'roosterjs-content-model-dom';
+import { convertMarkdownToContentModel } from 'roosterjs-content-model-markdown';
+import type { ClipboardData, IEditor } from 'roosterjs-content-model-types';
+
+// Tags that are considered "thin wrappers", which only add structure (such as line breaks)
+// around the plain text without applying any real formatting to its content.
+const ThinWrapperTags = new Set<string>(['DIV', 'P', 'BR', 'SPAN']);
+
+/**
+ * @internal
+ * Detect whether the pasted content is plain text, or HTML that is only a thin wrapper of
+ * plain text (for example, each line wrapped in a DIV or P with no other formatting). When
+ * this is the case we can safely interpret the plain text as markdown.
+ * @param clipboardData The clipboard data of the paste
+ * @param fragment The parsed HTML fragment to be pasted
+ */
+export function shouldConvertPastedTextToMarkdown(
+    clipboardData: ClipboardData,
+    fragment: DocumentFragment
+): boolean {
+    const { text, rawHtml } = clipboardData;
+
+    // There must be some plain text to interpret as markdown
+    if (!text || !text.trim()) {
+        return false;
+    }
+
+    // No HTML content at all (text/plain only), so the plain text is all we have
+    if (!rawHtml) {
+        return true;
+    }
+
+    // There is HTML content, only continue when it is a thin wrapper of the plain text
+    return isThinWrapperOfPlainText(fragment, text);
+}
+
+/**
+ * @internal
+ * Interpret the given plain text as markdown, convert it to a DOM tree and replace the
+ * content of the given fragment with the result, so that we paste formatted HTML instead
+ * of the original markdown text.
+ * @param editor The editor instance
+ * @param fragment The fragment whose content will be replaced
+ * @param text The plain text (markdown) to convert
+ */
+export function convertPastedTextToMarkdown(
+    editor: IEditor,
+    fragment: DocumentFragment,
+    text: string
+) {
+    const model = convertMarkdownToContentModel(text);
+
+    while (fragment.firstChild) {
+        fragment.removeChild(fragment.firstChild);
+    }
+
+    contentModelToDom(editor.getDocument(), fragment, model, createModelToDomContext());
+}
+
+function isThinWrapperOfPlainText(fragment: DocumentFragment, text: string): boolean {
+    const elements = fragment.querySelectorAll('*');
+
+    for (let i = 0; i < elements.length; i++) {
+        const element = elements[i];
+
+        // Any element that is not a structural wrapper, or that carries its own attributes
+        // (style, class, etc.), means the HTML adds real formatting on top of the text.
+        if (!ThinWrapperTags.has(element.tagName) || element.attributes.length > 0) {
+            return false;
+        }
+    }
+
+    // Make sure the HTML and the plain text actually represent the same content
+    return removeWhitespace(fragment.textContent || '') === removeWhitespace(text);
+}
+
+function removeWhitespace(text: string): string {
+    return text.replace(/\s/g, '');
+}
diff --git a/packages/roosterjs-content-model-plugins/lib/paste/PastePlugin.ts b/packages/roosterjs-content-model-plugins/lib/paste/PastePlugin.ts
index 4126af50d4fb..886dc843cc92 100644
--- a/packages/roosterjs-content-model-plugins/lib/paste/PastePlugin.ts
+++ b/packages/roosterjs-content-model-plugins/lib/paste/PastePlugin.ts
@@ -1,6 +1,10 @@
 import { addParser } from './utils/addParser';
 import { blockElementParser } from './parsers/blockElementParser';
 import { chainSanitizerCallback } from './utils/chainSanitizerCallback';
+import {
+    convertPastedTextToMarkdown,
+    shouldConvertPastedTextToMarkdown,
+} from './Markdown/convertPastedTextToMarkdown';
 import { DefaultSanitizers } from './DefaultSanitizers';
 import { deprecatedBorderColorParser } from './parsers/deprecatedColorParser';
 import { getDocumentSource } from './pasteSourceValidations/getDocumentSource';
@@ -144,6 +148,19 @@ export class PastePlugin implements EditorPlugin {
             case 'oneNoteDesktop':
                 processPastedContentFromOneNote(event);
                 break;
+
+            case 'default':
+                // When the pasted content is plain text (or HTML that is just a thin
+                // wrapper of plain text), interpret it as markdown and replace the paste
+                // fragment with the converted formatted HTML, so we paste formatted content
+                // by default instead of the raw markdown text.
+                if (
+                    pasteType === 'normal' &&
+                    shouldConvertPastedTextToMarkdown(clipboardData, fragment)
+                ) {
+                    convertPastedTextToMarkdown(this.editor, fragment, clipboardData.text);
+                }
+                break;
         }
 
         addParser(event.domToModelOption, 'link', parseLink);
diff --git a/packages/roosterjs-content-model-plugins/package.json b/packages/roosterjs-content-model-plugins/package.json
index 3b25efcf7192..ecaa2d09e874 100644
--- a/packages/roosterjs-content-model-plugins/package.json
+++ b/packages/roosterjs-content-model-plugins/package.json
@@ -5,6 +5,7 @@
         "tslib": "^2.3.1",
         "roosterjs-content-model-core": "",
         "roosterjs-content-model-dom": "",
+        "roosterjs-content-model-markdown": "",
         "roosterjs-content-model-types": "",
         "roosterjs-content-model-api": ""
     },
diff --git a/packages/roosterjs-content-model-plugins/test/paste/Markdown/convertPastedTextToMarkdownTest.ts b/packages/roosterjs-content-model-plugins/test/paste/Markdown/convertPastedTextToMarkdownTest.ts
new file mode 100644
index 000000000000..a65c438c67fe
--- /dev/null
+++ b/packages/roosterjs-content-model-plugins/test/paste/Markdown/convertPastedTextToMarkdownTest.ts
@@ -0,0 +1,156 @@
+import { IEditor } from 'roosterjs-content-model-types';
+import {
+    convertPastedTextToMarkdown,
+    shouldConvertPastedTextToMarkdown,
+} from '../../../lib/paste/Markdown/convertPastedTextToMarkdown';
+
+function createFragment(html: string): DocumentFragment {
+    const template = document.createElement('template');
+    template.innerHTML = html;
+    return template.content;
+}
+
+describe('shouldConvertPastedTextToMarkdown', () => {
+    it('returns false when there is no plain text', () => {
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text: '', rawHtml: null },
+            createFragment('')
+        );
+
+        expect(result).toBeFalse();
+    });
+
+    it('returns false when the plain text is only whitespace', () => {
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text: '   \n  ', rawHtml: null },
+            createFragment('')
+        );
+
+        expect(result).toBeFalse();
+    });
+
+    it('returns true when there is plain text and no HTML (rawHtml is null)', () => {
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text: '# Heading', rawHtml: null },
+            createFragment('')
+        );
+
+        expect(result).toBeTrue();
+    });
+
+    it('returns true when there is plain text and rawHtml is undefined', () => {
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text: '# Heading', rawHtml: undefined },
+            createFragment('')
+        );
+
+        expect(result).toBeTrue();
+    });
+
+    it('returns true when the HTML is a thin wrapper of the plain text', () => {
+        const text = '# Heading\n- item 1\n- item 2';
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text, rawHtml: '<div># Heading</div><div>- item 1</div><div>- item 2</div>' },
+            createFragment('<div># Heading</div><div>- item 1</div><div>- item 2</div>')
+        );
+
+        expect(result).toBeTrue();
+    });
+
+    it('returns true when the HTML uses P and BR as thin wrappers', () => {
+        const text = 'line 1\nline 2';
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text, rawHtml: '<p>line 1<br>line 2</p>' },
+            createFragment('<p>line 1<br>line 2</p>')
+        );
+
+        expect(result).toBeTrue();
+    });
+
+    it('returns false when the HTML contains a formatting element', () => {
+        const text = 'hello world';
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text, rawHtml: '<div>hello <b>world</b></div>' },
+            createFragment('<div>hello <b>world</b></div>')
+        );
+
+        expect(result).toBeFalse();
+    });
+
+    it('returns false when a thin wrapper element carries attributes', () => {
+        const text = 'hello world';
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text, rawHtml: '<div style="font-weight:bold">hello world</div>' },
+            createFragment('<div style="font-weight:bold">hello world</div>')
+        );
+
+        expect(result).toBeFalse();
+    });
+
+    it('returns false when the HTML text does not match the plain text', () => {
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text: 'hello world', rawHtml: '<div>different content</div>' },
+            createFragment('<div>different content</div>')
+        );
+
+        expect(result).toBeFalse();
+    });
+
+    it('returns false when the HTML contains a link', () => {
+        const text = 'see roosterjs';
+        const result = shouldConvertPastedTextToMarkdown(
+            <any>{ text, rawHtml: '<div>see <a href="https://x">roosterjs</a></div>' },
+            createFragment('<div>see <a href="https://x">roosterjs</a></div>')
+        );
+
+        expect(result).toBeFalse();
+    });
+});
+
+describe('convertPastedTextToMarkdown', () => {
+    let editor: IEditor;
+
+    beforeEach(() => {
+        editor = (<any>{
+            getDocument: () => document,
+        }) as IEditor;
+    });
+
+    it('converts a markdown heading into an HTML heading', () => {
+        const fragment = createFragment('<div># Heading</div>');
+
+        convertPastedTextToMarkdown(editor, fragment, '# Heading');
+
+        const div = document.createElement('div');
+        div.appendChild(fragment.cloneNode(true));
+
+        expect(div.querySelector('h1')).not.toBeNull();
+        expect(div.textContent).toBe('Heading');
+    });
+
+    it('converts a markdown unordered list into list items', () => {
+        const fragment = createFragment('');
+
+        convertPastedTextToMarkdown(editor, fragment, '- item 1\n- item 2');
+
+        const div = document.createElement('div');
+        div.appendChild(fragment.cloneNode(true));
+
+        const listItems = div.querySelectorAll('li');
+        expect(listItems.length).toBe(2);
+        expect(listItems[0].textContent).toBe('item 1');
+        expect(listItems[1].textContent).toBe('item 2');
+    });
+
+    it('clears the existing content of the fragment before conversion', () => {
+        const fragment = createFragment('<div>old content</div>');
+
+        convertPastedTextToMarkdown(editor, fragment, 'new content');
+
+        const div = document.createElement('div');
+        div.appendChild(fragment.cloneNode(true));
+
+        expect(div.textContent).toBe('new content');
+        expect(div.textContent).not.toContain('old');
+    });
+});
diff --git a/packages/roosterjs-content-model-plugins/test/paste/plugin/ContentModelPastePluginTest.ts b/packages/roosterjs-content-model-plugins/test/paste/plugin/ContentModelPastePluginTest.ts
index b3dd98241be7..07cba62ca197 100644
--- a/packages/roosterjs-content-model-plugins/test/paste/plugin/ContentModelPastePluginTest.ts
+++ b/packages/roosterjs-content-model-plugins/test/paste/plugin/ContentModelPastePluginTest.ts
@@ -1,6 +1,7 @@
 import * as addParser from '../../../lib/paste/utils/addParser';
 import * as ExcelFile from '../../../lib/paste/Excel/processPastedContentFromExcel';
 import * as getDocumentSource from '../../../lib/paste/pasteSourceValidations/getDocumentSource';
+import * as MarkdownFile from '../../../lib/paste/Markdown/convertPastedTextToMarkdown';
 import * as oneNoteFile from '../../../lib/paste/oneNote/processPastedContentFromOneNote';
 import * as PowerPointFile from '../../../lib/paste/PowerPoint/processPastedContentFromPowerPoint';
 import * as setProcessor from '../../../lib/paste/utils/setProcessor';
@@ -24,6 +25,7 @@ describe('Content Model Paste Plugin Test', () => {
             getTrustedHTMLHandler: () => trustedHTMLHandler,
             getDOMCreator: () => domCreator,
             getEnvironment: () => ({}),
+            getDocument: () => document,
         } as any) as IEditor;
         spyOn(addParser, 'addParser').and.callThrough();
         spyOn(setProcessor, 'setProcessor').and.callThrough();
@@ -174,6 +176,60 @@ describe('Content Model Paste Plugin Test', () => {
             expect(Object.keys(event.domToModelOption.styleSanitizers).length).toEqual(4);
         });
 
+        it('Default | plain text is converted to markdown HTML', () => {
+            spyOn(getDocumentSource, 'getDocumentSource').and.returnValue('default');
+            spyOn(MarkdownFile, 'convertPastedTextToMarkdown').and.callThrough();
+
+            (<any>event).clipboardData = {
+                text: '# Heading',
+                rawHtml: null,
+                types: [],
+            };
+
+            plugin.initialize(editor);
+            plugin.onPluginEvent(event);
+
+            expect(MarkdownFile.convertPastedTextToMarkdown).toHaveBeenCalledWith(
+                editor,
+                event.fragment,
+                '# Heading'
+            );
+        });
+
+        it('Default | formatted HTML is not converted to markdown HTML', () => {
+            spyOn(getDocumentSource, 'getDocumentSource').and.returnValue('default');
+            spyOn(MarkdownFile, 'convertPastedTextToMarkdown').and.callThrough();
+
+            (<any>event).clipboardData = {
+                text: 'hello world',
+                rawHtml: '<div>hello <b>world</b></div>',
+                types: [],
+            };
+            event.fragment.appendChild(domCreator.htmlToDOM('<div>hello <b>world</b></div>').body);
+
+            plugin.initialize(editor);
+            plugin.onPluginEvent(event);
+
+            expect(MarkdownFile.convertPastedTextToMarkdown).not.toHaveBeenCalled();
+        });
+
+        it('Default | plain text is not converted when pasting as plain text', () => {
+            spyOn(getDocumentSource, 'getDocumentSource').and.returnValue('default');
+            spyOn(MarkdownFile, 'convertPastedTextToMarkdown').and.callThrough();
+
+            (<any>event).pasteType = 'asPlainText';
+            (<any>event).clipboardData = {
+                text: '# Heading',
+                rawHtml: null,
+                types: [],
+            };
+
+            plugin.initialize(editor);
+            plugin.onPluginEvent(event);
+
+            expect(MarkdownFile.convertPastedTextToMarkdown).not.toHaveBeenCalled();
+        });
+
         it('excelNonNativeEvent', () => {
             spyOn(getDocumentSource, 'getDocumentSource').and.returnValue('excelNonNativeEvent');
             spyOn(ExcelFile, 'processPastedContentFromExcel').and.callThrough();