Upgrading to 2.3.2 – Uninitialized constant ApplicationController

Upgrading from a previous version of Rails to the latest 2.3.2, you get an error:

NameError: uninitialized constant ApplicationController

both in the web browser and in console.

Since the introduction of Rails 2.3 the application.rb file has been renamed to application_controller.rb.
So in order to solve the problem just rename your file application.rb to application_controller.rb.

Thanks to the post here