diff --git a/Makefile b/Makefile
index db44eae605c42f..75d524d73b1205 100644
--- a/Makefile
+++ b/Makefile
@@ -1,8 +1,8 @@
 VERSION_MAJOR 	   = 1
-VERSION_MINOR 	   = 6
-PATCHLEVEL 	   = 99
+VERSION_MINOR 	   = 7
+PATCHLEVEL 	   = 0
 VERSION_RESERVED   = 0
-EXTRAVERSION       =
+EXTRAVERSION       = -rc1
 NAME 		   = Zephyr Kernel
 
 export SOURCE_DIR PROJECT MDEF_FILE