diff --git a/packages/create-instance/create-instance.js b/packages/create-instance/create-instance.js
index fb7cfc292..d1bc01657 100644
--- a/packages/create-instance/create-instance.js
+++ b/packages/create-instance/create-instance.js
@@ -11,7 +11,7 @@ import createScopedSlots from './create-scoped-slots'
 import { createStubsFromStubsObject } from './create-component-stubs'
 import { patchCreateElement } from './patch-create-element'
 
-function createContext(options, scopedSlots) {
+function createContext(options, scopedSlots, currentProps) {
   const on = {
     ...(options.context && options.context.on),
     ...options.listeners
@@ -21,7 +21,7 @@ function createContext(options, scopedSlots) {
       ...options.attrs,
       // pass as attrs so that inheritAttrs works correctly
       // propsData should take precedence over attrs
-      ...options.propsData
+      ...currentProps
     },
     ...(options.context || {}),
     on,
@@ -98,10 +98,16 @@ export default function createInstance(
   parentComponentOptions._provided = options.provide
   parentComponentOptions.$_doNotStubChildren = true
   parentComponentOptions._isFunctionalContainer = componentOptions.functional
+  const originalDataFn = parentComponentOptions.data
+  parentComponentOptions.data = function() {
+    const originalData = originalDataFn ? originalDataFn() : {}
+    originalData.vueTestUtils_childProps = { ...options.propsData }
+    return originalData
+  }
   parentComponentOptions.render = function(h) {
     return h(
       Constructor,
-      createContext(options, scopedSlots),
+      createContext(options, scopedSlots, this.vueTestUtils_childProps),
       createChildren(this, h, options)
     )
   }
diff --git a/packages/test-utils/src/wrapper.js b/packages/test-utils/src/wrapper.js
index b8beeca16..bc2a5e6a9 100644
--- a/packages/test-utils/src/wrapper.js
+++ b/packages/test-utils/src/wrapper.js
@@ -1,10 +1,7 @@
 // @flow
-
-import Vue from 'vue'
 import pretty from 'pretty'
 import getSelector from './get-selector'
 import { REF_SELECTOR, FUNCTIONAL_OPTIONS, VUE_VERSION } from 'shared/consts'
-import config from './config'
 import WrapperArray from './wrapper-array'
 import ErrorWrapper from './error-wrapper'
 import { throwError, getCheckedEvent, isPhantomJS } from 'shared/util'
@@ -478,8 +475,6 @@ export default class Wrapper implements BaseWrapper {
    * Sets vm props
    */
   setProps(data: Object): void {
-    const originalConfig = Vue.config.silent
-    Vue.config.silent = config.silent
     if (this.isFunctionalComponent) {
       throwError(
         `wrapper.setProps() cannot be called on a functional component`
@@ -503,38 +498,26 @@ export default class Wrapper implements BaseWrapper {
         )
       }
       if (
-        !this.vm ||
-        !this.vm.$options._propKeys ||
-        !this.vm.$options._propKeys.some(prop => prop === key)
+        VUE_VERSION <= 2.3 &&
+        // $FlowIgnore : Problem with possibly null this.vm
+        (!this.vm.$options._propKeys ||
+          !this.vm.$options._propKeys.some(prop => prop === key))
       ) {
-        if (VUE_VERSION > 2.3) {
-          // $FlowIgnore : Problem with possibly null this.vm
-          this.vm.$attrs[key] = data[key]
-          return
-        }
         throwError(
           `wrapper.setProps() called with ${key} property which ` +
             `is not defined on the component`
         )
       }
 
-      if (this.vm && this.vm._props) {
-        // Set actual props value
-        this.vm._props[key] = data[key]
-        // $FlowIgnore : Problem with possibly null this.vm
-        this.vm[key] = data[key]
-      } else {
-        // $FlowIgnore : Problem with possibly null this.vm.$options
-        this.vm.$options.propsData[key] = data[key]
-        // $FlowIgnore : Problem with possibly null this.vm
-        this.vm[key] = data[key]
-        // $FlowIgnore : Need to call this twice to fix watcher bug in 2.0.x
-        this.vm[key] = data[key]
+      if (this.vm && this.vm.$parent) {
+        this.vm.$parent.vueTestUtils_childProps[key] = data[key]
       }
     })
     // $FlowIgnore : Problem with possibly null this.vm
     this.vm.$forceUpdate()
-    Vue.config.silent = originalConfig
+    // We need to explicitly trigger parent watcher to support sync scenarios
+    // $FlowIgnore : Problem with possibly null this.vm
+    this.vm.$parent._watcher.run()
   }
 
   /**
diff --git a/test/resources/components/component-with-watch-immediate.vue b/test/resources/components/component-with-watch-immediate.vue
new file mode 100644
index 000000000..a660b9865
--- /dev/null
+++ b/test/resources/components/component-with-watch-immediate.vue
@@ -0,0 +1,22 @@
+<script>
+export default {
+  props: ['prop1'],
+  data: function() {
+    return {
+      data1: null
+    }
+  },
+
+  watch: {
+    prop1: {
+      handler() {
+        this.data1 = this.prop1
+      },
+      immediate: true
+    }
+  }
+}
+</script>
+<template>
+  <h1>test</h1>
+</template>
diff --git a/test/specs/config.spec.js b/test/specs/config.spec.js
index 660aafabc..c66ab40a6 100644
--- a/test/specs/config.spec.js
+++ b/test/specs/config.spec.js
@@ -85,9 +85,7 @@ describeWithShallowAndMount('config', mountingMethod => {
       localVue
     })
     expect(wrapper.vm.prop1).to.equal('example')
-    wrapper.setProps({
-      prop1: 'new value'
-    })
+    wrapper.vm.prop1 = 'new value'
     expect(console.error).calledWith(sandbox.match('[Vue warn]'))
   })
 })
diff --git a/test/specs/wrapper/setProps.spec.js b/test/specs/wrapper/setProps.spec.js
index de74807dd..29b38c905 100644
--- a/test/specs/wrapper/setProps.spec.js
+++ b/test/specs/wrapper/setProps.spec.js
@@ -1,6 +1,7 @@
 import { compileToFunctions } from 'vue-template-compiler'
 import ComponentWithProps from '~resources/components/component-with-props.vue'
 import ComponentWithWatch from '~resources/components/component-with-watch.vue'
+import ComponentWithWatchImmediate from '~resources/components/component-with-watch-immediate.vue'
 import { describeWithShallowAndMount, vueVersion } from '~resources/utils'
 import { itDoNotRunIf } from 'conditional-specs'
 import Vue from 'vue'
@@ -244,6 +245,17 @@ describeWithShallowAndMount('setProps', mountingMethod => {
     expect(wrapper.vm.propA).to.equal('value')
   })
 
+  it('correctly sets props in async mode when component has immediate watchers', async () => {
+    const wrapper = mountingMethod(ComponentWithWatchImmediate, {
+      sync: false
+    })
+
+    const prop1 = 'testest'
+    wrapper.setProps({ prop1 })
+    await Vue.nextTick()
+    expect(wrapper.vm.prop1).to.equal(prop1)
+  })
+
   it('throws an error if node is not a Vue instance', () => {
     const message = 'wrapper.setProps() can only be called on a Vue instance'
     const compiled = compileToFunctions('<div><p></p></div>')