Index: src/wp-includes/formatting.php
===================================================================
--- src/wp-includes/formatting.php	(revision 39637)
+++ src/wp-includes/formatting.php	(working copy)
@@ -474,6 +474,9 @@
 	// Add a double line break below block-level closing tags.
 	$pee = preg_replace('!(</' . $allblocks . '>)!', "$1\n\n", $pee);
 
+	// hr's are block-level and self-closing
+	$pee = preg_replace('!(<hr\s?/?>)!', "\n\n$1\n\n", $pee );
+
 	// Standardize newline characters to "\n".
 	$pee = str_replace(array("\r\n", "\r"), "\n", $pee);
 
Index: tests/phpunit/tests/formatting/Autop.php
===================================================================
--- tests/phpunit/tests/formatting/Autop.php	(revision 39637)
+++ tests/phpunit/tests/formatting/Autop.php	(working copy)
@@ -312,7 +312,6 @@
 			'h4',
 			'h5',
 			'h6',
-			'hr',
 			'fieldset',
 			'legend',
 			'section',
@@ -534,4 +533,14 @@
 
 		$this->assertEquals( $expected, trim( wpautop( $content ) ) );
 	}
+
+	/**
+	 * @ticket 14674
+	 */
+	function test_the_hr_is_not_peed() {
+		$content = 'paragraph1<hr>paragraph2';
+		$expected = "<p>paragraph1</p>\n<hr>\n<p>paragraph2</p>";
+
+		$this->assertEquals( $expected, trim( wpautop( $content ) ) );
+	}
 }