Is scrapy supported on google app engine?

No but you could try AWS (http://dev.scrapy.org/wiki/AmazonEC2)

You cannot use C extensions on App Engine, which rules out lxml and (I believe) libxml2 and pyopenssl.

I doubt most of what Twisted does is possible in the App Engine sandbox either; you can't directly open sockets or spawn threads.

EDIT (January 2013): The Python 2.7 runtime does include some C extensions, including lxml. However, it's still not possible to use C extensions that aren't provided by Google with the runtime; most likely scrapy is still unusable at this time.