diff --git a/pandas/core/frame.py b/pandas/core/frame.py
index fad348aed0..4811aff3a3 100644
--- a/pandas/core/frame.py
+++ b/pandas/core/frame.py
@@ -3003,10 +3003,9 @@ def combiner(x, y, needs_i8_conversion=False):
         return self.combine(other, combiner, overwrite=False)
 
     def update(self, other, join='left', overwrite=True, filter_func=None,
-               raise_conflict=False):
+               raise_conflict=False, on=None):
         """
-        Modify DataFrame in place using non-NA values from passed
-        DataFrame. Aligns on indices
+        Modify DataFrame in place using non-NA values from passed DataFrame.
 
         Parameters
         ----------
@@ -3020,6 +3019,10 @@ def update(self, other, join='left', overwrite=True, filter_func=None,
         raise_conflict : boolean
             If True, will raise an error if the DataFrame and other both
             contain data in the same place.
+        on : label or list, optional
+            Identify the column to should match up observations in other and
+            self. If None, other.reindex_like(self) is called so the index
+            must match to get a meaningful result.
         """
         # TODO: Support other joins
         if join != 'left':  # pragma: no cover
@@ -3028,31 +3031,55 @@ def update(self, other, join='left', overwrite=True, filter_func=None,
         if not isinstance(other, DataFrame):
             other = DataFrame(other)
 
-        other = other.reindex_like(self)
+        if on is None:
+            other = other.reindex(index=self.index)
+        else:
+            try:
+                old_index = self.index
+                col_order = self.columns
+                self.set_index(on, inplace=True)
+                other.set_index(on, inplace=True)
+                other = other.reindex(index=self.index)
+            except Exception, err:
+                self.reset_index(inplace=True)
+                self.set_index(old_index)
+                raise(err)
 
-        for col in self.columns:
-            this = self[col].values
-            that = other[col].values
-            if filter_func is not None:
-                mask = -filter_func(this) | isnull(that)
-            else:
-                if raise_conflict:
-                    mask_this = notnull(that)
-                    mask_that = notnull(this)
-                    if any(mask_this & mask_that):
-                        raise ValueError("Data overlaps.")
+        try:
+            for col in other.columns:
+                if col not in self:  # don't update what doesn't exist
+                    continue
+                this = self[col].values
+                that = other[col].values
+                if filter_func is not None:
+                    mask = -filter_func(this) | isnull(that)
+                else:
+                    if raise_conflict:
+                        mask_this = notnull(that)
+                        mask_that = notnull(this)
+                        if any(mask_this & mask_that):
+                            raise ValueError("Data overlaps.")
+
+                    if overwrite:
+                        mask = isnull(that)
+
+                        # don't overwrite columns unecessarily
+                        if mask.all():
+                            continue
+                    else:
+                        mask = notnull(this)
 
-                if overwrite:
-                    mask = isnull(that)
+                self[col] = expressions.where(
+                    mask, this, that, raise_on_error=True)
 
-                    # don't overwrite columns unecessarily
-                    if mask.all():
-                        continue
-                else:
-                    mask = notnull(this)
+        except Exception, err:
+            raise(err)
 
-            self[col] = expressions.where(
-                mask, this, that, raise_on_error=True)
+        finally:
+            if on is not None:
+                self.reset_index(inplace=True)
+                self.set_index(old_index)
+                self = self[col_order]
 
     #----------------------------------------------------------------------
     # Misc methods
diff --git a/pandas/tests/test_frame.py b/pandas/tests/test_frame.py
index 3c39d610c1..0326a73e52 100644
--- a/pandas/tests/test_frame.py
+++ b/pandas/tests/test_frame.py
@@ -24,7 +24,7 @@
 from numpy.random import randn
 import numpy as np
 import numpy.ma as ma
-from numpy.testing import assert_array_equal
+from numpy.testing import assert_array_equal, assert_
 import numpy.ma.mrecords as mrecords
 
 import pandas.core.nanops as nanops
@@ -9974,6 +9974,43 @@ def test_update(self):
                               [1.5, nan, 7.]])
         assert_frame_equal(df, expected)
 
+    def test_update_on(self):
+        df = DataFrame([[np.nan, 'A'],
+                        [np.nan, 'A'],
+                        [np.nan, 'A'],
+                        [1.5, 'B'],
+                        [2.2, 'C'],
+                        [3.1, 'C'],
+                        [1.2, 'B']], columns=['number', 'name'])
+
+        df2 = DataFrame([[3.5, 'A']], columns=['number', 'name'])
+
+        expected = DataFrame([[3.5, 'A'],
+                              [3.5, 'A'],
+                              [3.5, 'A'],
+                              [1.5, 'B'],
+                              [2.2, 'C'],
+                              [3.1, 'C'],
+                              [1.2, 'B']], columns=['number', 'name'])
+        df.update(df2, on='name')
+        assert_frame_equal(df, expected)
+
+        df = DataFrame([[np.nan, 'A'],
+                [np.nan, 'A'],
+                [np.nan, 'A'],
+                [1.5, 'B'],
+                [2.2, 'C'],
+                [3.1, 'C'],
+                [1.2, 'B']], columns=['number', 'name'])
+
+        df2 = DataFrame([[3.5, 'A'], [2.5, 'A']],
+                        columns=['number', 'name'])
+
+        assertRaises(ValueError, df.update, df2, on='name')
+
+        ## and the index should be reset
+        assert_(df.index.equals(pd.Index(range(7))))
+
     def test_update_dtypes(self):
 
         # gh 3016