diff --git a/heat/engine/resource.py b/heat/engine/resource.py
index 147f835e01..e2d3ddda05 100644
--- a/heat/engine/resource.py
+++ b/heat/engine/resource.py
@@ -1441,6 +1441,7 @@ class Resource(status.ResourceStatus):
                 self.state_set(self.UPDATE, self.FAILED,
                                six.text_type(failure))
                 raise failure
+            self.replaced_by = None
 
         runner = scheduler.TaskRunner(self.update, new_res_def,
                                       new_template_id=template_id,
diff --git a/heat/tests/convergence/framework/fake_resource.py b/heat/tests/convergence/framework/fake_resource.py
index e0e82b6bdb..073897561b 100644
--- a/heat/tests/convergence/framework/fake_resource.py
+++ b/heat/tests/convergence/framework/fake_resource.py
@@ -24,9 +24,9 @@ LOG = logging.getLogger(__name__)
 class TestResource(resource.Resource):
 
     PROPERTIES = (
-        A, C, CA, rA, rB
+        A, B, C, CA, rA, rB
     ) = (
-        'a', 'c', 'ca', '!a', '!b'
+        'a', 'b', 'c', 'ca', '!a', '!b'
     )
 
     ATTRIBUTES = (
@@ -42,6 +42,12 @@ class TestResource(resource.Resource):
             default='a',
             update_allowed=True
         ),
+        B: properties.Schema(
+            properties.Schema.STRING,
+            _('Fake property b.'),
+            default='b',
+            update_allowed=True
+        ),
         C: properties.Schema(
             properties.Schema.STRING,
             _('Fake property c.'),
diff --git a/heat/tests/convergence/scenarios/update_user_replace_rollback_update.py b/heat/tests/convergence/scenarios/update_user_replace_rollback_update.py
new file mode 100644
index 0000000000..1f365ea6dc
--- /dev/null
+++ b/heat/tests/convergence/scenarios/update_user_replace_rollback_update.py
@@ -0,0 +1,54 @@
+#
+#    Licensed under the Apache License, Version 2.0 (the "License"); you may
+#    not use this file except in compliance with the License. You may obtain
+#    a copy of the License at
+#
+#         http://www.apache.org/licenses/LICENSE-2.0
+#
+#    Unless required by applicable law or agreed to in writing, software
+#    distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+#    WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+#    License for the specific language governing permissions and limitations
+#    under the License.
+
+example_template = Template({
+    'A': RsrcDef({'a': 'initial'}, []),
+    'B': RsrcDef({}, []),
+    'C': RsrcDef({'!a': GetAtt('A', 'a'), 'b': 'val1'}, []),
+    'D': RsrcDef({'c': GetRes('C')}, []),
+    'E': RsrcDef({'ca': GetAtt('C', '!a')}, []),
+})
+engine.create_stack('foo', example_template)
+engine.noop(5)
+engine.call(verify, example_template)
+
+example_template_updated = Template({
+    'A': RsrcDef({'a': 'updated'}, []),
+    'B': RsrcDef({}, []),
+    'C': RsrcDef({'!a': GetAtt('A', 'a'), 'b': 'val1'}, []),
+    'D': RsrcDef({'c': GetRes('C')}, []),
+    'E': RsrcDef({'ca': GetAtt('C', '!a')}, []),
+})
+engine.update_stack('foo', example_template_updated)
+engine.noop(3)
+
+engine.rollback_stack('foo')
+engine.noop(12)
+engine.call(verify, example_template)
+
+example_template_final = Template({
+    'A': RsrcDef({'a': 'initial'}, []),
+    'B': RsrcDef({}, []),
+    'C': RsrcDef({'!a': GetAtt('A', 'a'), 'b': 'val2'}, []),
+    'D': RsrcDef({'c': GetRes('C')}, []),
+    'E': RsrcDef({'ca': GetAtt('C', '!a')}, []),
+})
+
+engine.update_stack('foo', example_template_final)
+engine.noop(3)
+engine.call(verify, example_template_final)
+engine.noop(4)
+
+engine.delete_stack('foo')
+engine.noop(6)
+engine.call(verify, Template({}))