diff --git a/mercurial/posix.py b/mercurial/posix.py
--- a/mercurial/posix.py
+++ b/mercurial/posix.py
@@ -153,7 +153,7 @@ def setflags(f, l, x):
         # Turn off all +x bits
         os.chmod(f, s & 0o666)
 
-def copymode(src, dst, mode=None):
+def copymode(src, dst, mode=None, enforcewritable=False):
     '''Copy the file mode from the file at path src to dst.
     If src doesn't exist, we're using mode instead. If mode is None, we're
     using umask.'''
@@ -166,7 +166,13 @@ def copymode(src, dst, mode=None):
         if st_mode is None:
             st_mode = ~umask
         st_mode &= 0o666
-    os.chmod(dst, st_mode)
+
+    new_mode = st_mode
+
+    if enforcewritable:
+        new_mode |= stat.S_IWUSR
+
+    os.chmod(dst, new_mode)
 
 def checkexec(path):
     """
diff --git a/mercurial/util.py b/mercurial/util.py
--- a/mercurial/util.py
+++ b/mercurial/util.py
@@ -2045,7 +2045,7 @@ def splitpath(path):
     function if need.'''
     return path.split(pycompat.ossep)
 
-def mktempcopy(name, emptyok=False, createmode=None):
+def mktempcopy(name, emptyok=False, createmode=None, enforcewritable=False):
     """Create a temporary file with the same contents from name
 
     The permission bits are copied from the original file.
@@ -2061,7 +2061,8 @@ def mktempcopy(name, emptyok=False, crea
     # Temporary files are created with mode 0600, which is usually not
     # what we want.  If the original file already exists, just copy
     # its mode.  Otherwise, manually obey umask.
-    copymode(name, temp, createmode)
+    copymode(name, temp, createmode, enforcewritable)
+
     if emptyok:
         return temp
     try:
@@ -2204,7 +2205,9 @@ class atomictempfile(object):
     def __init__(self, name, mode='w+b', createmode=None, checkambig=False):
         self.__name = name      # permanent name
         self._tempname = mktempcopy(name, emptyok=('w' in mode),
-                                    createmode=createmode)
+                                    createmode=createmode,
+                                    enforcewritable=('w' in mode))
+
         self._fp = posixfile(self._tempname, mode)
         self._checkambig = checkambig
 
diff --git a/mercurial/windows.py b/mercurial/windows.py
--- a/mercurial/windows.py
+++ b/mercurial/windows.py
@@ -248,7 +248,7 @@ def sshargs(sshcmd, host, user, port):
 def setflags(f, l, x):
     pass
 
-def copymode(src, dst, mode=None):
+def copymode(src, dst, mode=None, enforcewritable=False):
     pass
 
 def checkexec(path):
diff --git a/tests/test-update-atomic.t b/tests/test-update-atomic.t
new file mode 100644
--- /dev/null
+++ b/tests/test-update-atomic.t
@@ -0,0 +1,142 @@
+#require execbit unix-permissions
+
+Checking that experimental.atomic-file works.
+
+  $ cat > $TESTTMP/show_mode.py <<EOF
+  > from __future__ import print_function
+  > import sys
+  > import os
+  > from stat import ST_MODE
+  > 
+  > for file_path in sys.argv[1:]:
+  >     file_stat = os.stat(file_path)
+  >     octal_mode = oct(file_stat[ST_MODE] & 0o777)
+  >     print("%s:%s" % (file_path, octal_mode))
+  > 
+  > EOF
+
+  $ hg init repo
+  $ cd repo
+
+  $ cat > .hg/showwrites.py <<EOF
+  > def uisetup(ui):
+  >   from mercurial import vfs
+  >   class newvfs(vfs.vfs):
+  >     def __call__(self, *args, **kwargs):
+  >       print('vfs open', args, sorted(list(kwargs.items())))
+  >       return super(newvfs, self).__call__(*args, **kwargs)
+  >   vfs.vfs = newvfs
+  > EOF
+
+  $ for v in a1 a2 b1 b2 c ro; do echo $v > $v; done
+  $ chmod +x b*
+  $ hg commit -Aqm _
+
+# We check that
+# - the changes are actually atomic
+# - that permissions are correct (all 4 cases of (executable before) * (executable after))
+# - that renames work, though they should be atomic anyway
+# - that it works when source files are read-only (but directories are read-write still)
+
+  $ for v in a1 a2 b1 b2 ro; do echo changed-$v > $v; done
+  $ chmod -x *1; chmod +x *2
+  $ hg rename c d
+  $ hg commit -qm _
+
+Check behavior without update.atomic-file
+
+  $ hg update -r 0 -q
+  $ hg update -r 1 --config extensions.showwrites=.hg/showwrites.py 2>&1 | grep "a1'.*wb"
+  ('vfs open', ('a1', 'wb'), [('atomictemp', False), ('backgroundclose', True)])
+
+  $ python $TESTTMP/show_mode.py *
+  a1:0644
+  a2:0755
+  b1:0644
+  b2:0755
+  d:0644
+  ro:0644
+
+Add a second revision for the ro file so we can test update when the file is
+present or not
+
+  $ echo "ro" > ro
+
+  $ hg commit -qm _
+
+Check behavior without update.atomic-file first
+
+  $ hg update -C -r 0 -q
+
+  $ hg update -r 1
+  6 files updated, 0 files merged, 1 files removed, 0 files unresolved
+
+  $ python $TESTTMP/show_mode.py *
+  a1:0644
+  a2:0755
+  b1:0644
+  b2:0755
+  d:0644
+  ro:0644
+
+Manually reset the mode of the read-only file
+
+  $ chmod a-w ro
+
+  $ python $TESTTMP/show_mode.py ro
+  ro:0444
+
+Now the file is present, try to update and check the permissions of the file
+
+  $ hg up -r 2
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+
+  $ python $TESTTMP/show_mode.py ro
+  ro:0644
+
+# The file which was read-only is now writable in the default behavior
+
+Check behavior with update.atomic-files
+
+
+  $ cat >> .hg/hgrc <<EOF
+  > [experimental]
+  > update.atomic-file = true
+  > EOF
+
+  $ hg update -C -r 0 -q
+  $ hg update -r 1 --config extensions.showwrites=.hg/showwrites.py 2>&1 | grep "a1'.*wb"
+  ('vfs open', ('a1', 'wb'), [('atomictemp', True), ('backgroundclose', True)])
+  $ hg st -A --rev 1
+  C a1
+  C a2
+  C b1
+  C b2
+  C d
+  C ro
+
+Check the file permission after update
+  $ python $TESTTMP/show_mode.py *
+  a1:0644
+  a2:0755
+  b1:0644
+  b2:0755
+  d:0644
+  ro:0644
+
+Manually reset the mode of the read-only file
+
+  $ chmod a-w ro
+
+  $ python $TESTTMP/show_mode.py ro
+  ro:0444
+
+Now the file is present, try to update and check the permissions of the file
+
+  $ hg update -r 2 --traceback
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+
+  $ python $TESTTMP/show_mode.py ro
+  ro:0644
+
+# The behavior is the same as without atomic update