diff --git a/mercurial/localrepo.py b/mercurial/localrepo.py
--- a/mercurial/localrepo.py
+++ b/mercurial/localrepo.py
@@ -789,28 +789,35 @@ class localrepository(repo.repository):
         ui.status(msg)
         if dryrun:
             return 0
+
+        parents = self.dirstate.parents()
         transaction.rollback(self.sopener, self.sjoin('undo'), ui.warn)
-        util.rename(self.join('undo.dirstate'), self.join('dirstate'))
         if os.path.exists(self.join('undo.bookmarks')):
             util.rename(self.join('undo.bookmarks'),
                         self.join('bookmarks'))
-        try:
-            branch = self.opener.read('undo.branch')
-            self.dirstate.setbranch(branch)
-        except IOError:
-            ui.warn(_('named branch could not be reset: '
-                      'current branch is still \'%s\'\n')
-                    % self.dirstate.branch())
         self.invalidate()
-        self.dirstate.invalidate()
-        self.destroyed()
-        parents = tuple([p.rev() for p in self.parents()])
-        if len(parents) > 1:
-            ui.status(_('working directory now based on '
-                        'revisions %d and %d\n') % parents)
-        else:
-            ui.status(_('working directory now based on '
-                        'revision %d\n') % parents)
+
+        parentgone = (parents[0] not in self.changelog.nodemap or
+                      parents[1] not in self.changelog.nodemap)
+        if parentgone:
+            util.rename(self.join('undo.dirstate'), self.join('dirstate'))
+            try:
+                branch = self.opener.read('undo.branch')
+                self.dirstate.setbranch(branch)
+            except IOError:
+                ui.warn(_('named branch could not be reset: '
+                          'current branch is still \'%s\'\n')
+                        % self.dirstate.branch())
+
+            self.dirstate.invalidate()
+            self.destroyed()
+            parents = tuple([p.rev() for p in self.parents()])
+            if len(parents) > 1:
+                ui.status(_('working directory now based on '
+                            'revisions %d and %d\n') % parents)
+            else:
+                ui.status(_('working directory now based on '
+                            'revision %d\n') % parents)
         return 0
 
     def invalidatecaches(self):
diff --git a/tests/test-acl.t b/tests/test-acl.t
--- a/tests/test-acl.t
+++ b/tests/test-acl.t
@@ -121,7 +121,6 @@ Extension disabled for lack of a hook
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 0 (undo push)
-  working directory now based on revision 0
   0:6675d58eff77
   
 
@@ -179,7 +178,6 @@ Extension disabled for lack of acl.sourc
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 0 (undo push)
-  working directory now based on revision 0
   0:6675d58eff77
   
 
@@ -247,7 +245,6 @@ No [acl.allow]/[acl.deny]
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 0 (undo push)
-  working directory now based on revision 0
   0:6675d58eff77
   
 
@@ -729,7 +726,6 @@ barney is allowed everywhere
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 0 (undo push)
-  working directory now based on revision 0
   0:6675d58eff77
   
 
@@ -1038,7 +1034,6 @@ acl.config can set only [acl.allow]/[acl
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 0 (undo push)
-  working directory now based on revision 0
   0:6675d58eff77
   
 
@@ -1114,7 +1109,6 @@ fred is always allowed
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 0 (undo push)
-  working directory now based on revision 0
   0:6675d58eff77
   
 
@@ -1261,7 +1255,6 @@ OS-level groups
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 0 (undo push)
-  working directory now based on revision 0
   0:6675d58eff77
   
 
@@ -1456,7 +1449,6 @@ No branch acls specified
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 2 (undo push)
-  working directory now based on revision 2
   2:fb35475503ef
   
 
@@ -1753,7 +1745,6 @@ Branch acl allow other
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 2 (undo push)
-  working directory now based on revision 2
   2:fb35475503ef
   
 
@@ -1838,7 +1829,6 @@ push foobar into the remote
   updating the branch cache
   checking for updated bookmarks
   repository tip rolled back to revision 2 (undo push)
-  working directory now based on revision 2
   2:fb35475503ef
   
 Branch acl conflicting deny
diff --git a/tests/test-bundle-r.t b/tests/test-bundle-r.t
--- a/tests/test-bundle-r.t
+++ b/tests/test-bundle-r.t
@@ -154,7 +154,6 @@
   4 files, 9 changesets, 7 total revisions
   $ hg rollback
   repository tip rolled back to revision 4 (undo pull)
-  working directory now based on revision -1
   $ cd ..
 
 should fail
@@ -232,7 +231,6 @@ revision 8
   4 files, 9 changesets, 7 total revisions
   $ hg rollback
   repository tip rolled back to revision 2 (undo unbundle)
-  working directory now based on revision 2
 
 revision 2
 
@@ -257,7 +255,6 @@ revision 4
   2 files, 5 changesets, 5 total revisions
   $ hg rollback
   repository tip rolled back to revision 2 (undo unbundle)
-  working directory now based on revision 2
   $ hg unbundle ../test-bundle-branch2.hg
   adding changesets
   adding manifests
@@ -277,7 +274,6 @@ revision 6
   3 files, 7 changesets, 6 total revisions
   $ hg rollback
   repository tip rolled back to revision 2 (undo unbundle)
-  working directory now based on revision 2
   $ hg unbundle ../test-bundle-cset-7.hg
   adding changesets
   adding manifests
diff --git a/tests/test-bundle.t b/tests/test-bundle.t
--- a/tests/test-bundle.t
+++ b/tests/test-bundle.t
@@ -90,7 +90,6 @@ Rollback empty
 
   $ hg -R empty rollback
   repository tip rolled back to revision -1 (undo pull)
-  working directory now based on revision -1
 
 Pull full.hg into empty again (using --cwd)
 
@@ -121,7 +120,6 @@ Rollback empty
 
   $ hg -R empty rollback
   repository tip rolled back to revision -1 (undo pull)
-  working directory now based on revision -1
 
 Pull full.hg into empty again (using -R)
 
@@ -219,7 +217,6 @@ Rollback empty
 
   $ hg rollback
   repository tip rolled back to revision -1 (undo pull)
-  working directory now based on revision -1
   $ cd ..
 
 Log -R bundle:empty+full.hg
diff --git a/tests/test-convert-cvs.t b/tests/test-convert-cvs.t
--- a/tests/test-convert-cvs.t
+++ b/tests/test-convert-cvs.t
@@ -112,7 +112,6 @@ convert fresh repo with --filemap
   1 import
   filtering out empty revision
   repository tip rolled back to revision 0 (undo commit)
-  working directory now based on revision -1
   0 ci0
   updating tags
   $ hgcat b/c
diff --git a/tests/test-eol-hook.t b/tests/test-eol-hook.t
--- a/tests/test-eol-hook.t
+++ b/tests/test-eol-hook.t
@@ -161,7 +161,6 @@ We can fix the head and push again
   added 3 changesets with 3 changes to 2 files (+1 heads)
   $ hg -R ../main rollback
   repository tip rolled back to revision 5 (undo push)
-  working directory now based on revision -1
 
 Test it still fails with checkallhook
 
diff --git a/tests/test-hook.t b/tests/test-hook.t
--- a/tests/test-hook.t
+++ b/tests/test-hook.t
@@ -277,7 +277,6 @@ outgoing hooks can see env vars
   (run 'hg update' to get a working copy)
   $ hg rollback
   repository tip rolled back to revision 3 (undo pull)
-  working directory now based on revision 0
 
 preoutgoing hook can prevent outgoing changes
 
diff --git a/tests/test-import-bypass.t b/tests/test-import-bypass.t
--- a/tests/test-import-bypass.t
+++ b/tests/test-import-bypass.t
@@ -62,7 +62,6 @@ Test --user, --date and --message
   
   $ hg rollback
   repository tip rolled back to revision 1 (undo commit)
-  working directory now based on revision 0
 
 Test --import-branch
 
@@ -75,7 +74,6 @@ Test --import-branch
   
   $ hg rollback
   repository tip rolled back to revision 1 (undo commit)
-  working directory now based on revision 0
 
 Test --strip
 
@@ -98,7 +96,6 @@ Test --strip
   applying patch from stdin
   $ hg rollback
   repository tip rolled back to revision 1 (undo commit)
-  working directory now based on revision 0
 
 Test unsupported combinations
 
diff --git a/tests/test-notify-changegroup.t b/tests/test-notify-changegroup.t
--- a/tests/test-notify-changegroup.t
+++ b/tests/test-notify-changegroup.t
@@ -74,7 +74,6 @@ push
   +a
   $ hg --cwd a rollback
   repository tip rolled back to revision -1 (undo push)
-  working directory now based on revision -1
 
 unbundle with unrelated source
 
@@ -89,7 +88,6 @@ unbundle with unrelated source
   (run 'hg update' to get a working copy)
   $ hg --cwd a rollback
   repository tip rolled back to revision -1 (undo unbundle)
-  working directory now based on revision -1
 
 unbundle with correct source
 
diff --git a/tests/test-notify.t b/tests/test-notify.t
--- a/tests/test-notify.t
+++ b/tests/test-notify.t
@@ -200,7 +200,6 @@ fail for config file is missing
 
   $ hg --cwd b rollback
   repository tip rolled back to revision 0 (undo pull)
-  working directory now based on revision 0
   $ hg --cwd b pull ../a 2>&1 | grep 'error.*\.notify\.conf' > /dev/null && echo pull failed
   pull failed
   $ touch ".notify.conf"
@@ -209,7 +208,6 @@ pull
 
   $ hg --cwd b rollback
   repository tip rolled back to revision 0 (undo pull)
-  working directory now based on revision 0
   $ hg --traceback --cwd b pull ../a  | \
   >   python -c 'import sys,re; print re.sub("\n\t", " ", sys.stdin.read()),'
   pulling from ../a
@@ -254,7 +252,6 @@ pull
 
   $ hg --cwd b rollback
   repository tip rolled back to revision 0 (undo pull)
-  working directory now based on revision 0
   $ hg --traceback --cwd b pull ../a | \
   >   python -c 'import sys,re; print re.sub("\n\t", " ", sys.stdin.read()),'
   pulling from ../a
diff --git a/tests/test-push-http.t b/tests/test-push-http.t
--- a/tests/test-push-http.t
+++ b/tests/test-push-http.t
@@ -64,7 +64,6 @@ expect success
   % serve errors
   $ hg rollback
   repository tip rolled back to revision 0 (undo serve)
-  working directory now based on revision 0
 
 expect success, server lacks the httpheader capability
 
@@ -81,7 +80,6 @@ expect success, server lacks the httphea
   % serve errors
   $ hg rollback
   repository tip rolled back to revision 0 (undo serve)
-  working directory now based on revision 0
 
 expect success, server lacks the unbundlehash capability
 
@@ -98,7 +96,6 @@ expect success, server lacks the unbundl
   % serve errors
   $ hg rollback
   repository tip rolled back to revision 0 (undo serve)
-  working directory now based on revision 0
 
 expect authorization error: all users denied
 
diff --git a/tests/test-rollback.t b/tests/test-rollback.t
--- a/tests/test-rollback.t
+++ b/tests/test-rollback.t
@@ -64,6 +64,35 @@ Test rollback of hg before issue 902 was
   $ hg branch
   test
 
+working dir unaffected by rollback: do not restore dirstate et. al.
+  $ hg log --template '{rev}  {branch}  {desc|firstline}\n'
+  0  default  add a again
+  $ hg status
+  M a
+  $ hg bookmark foo
+  $ hg commit -m'modify a again'
+  $ echo b > b
+  $ hg commit -Am'add b'
+  adding b
+  $ hg log --template '{rev}  {branch}  {desc|firstline}\n'
+  2  test  add b
+  1  test  modify a again
+  0  default  add a again
+  $ hg update default
+  1 files updated, 0 files merged, 1 files removed, 0 files unresolved
+  $ hg bookmark bar
+  $ cat .hg/undo.branch ; echo
+  test
+  $ hg rollback
+  repository tip rolled back to revision 1 (undo commit)
+  $ hg id -n
+  0
+  $ hg branch
+  default
+  $ cat .hg/bookmarks.current ; echo
+  bar
+  $ hg bookmark --delete foo
+
 rollback by pretxncommit saves commit message (issue 1635)
 
   $ echo a >> a
@@ -102,18 +131,18 @@ test rollback on served repository
   adding changesets
   adding manifests
   adding file changes
-  added 2 changesets with 2 changes to 1 files
+  added 3 changesets with 2 changes to 1 files (+1 heads)
   updating to branch default
   1 files updated, 0 files merged, 0 files removed, 0 files unresolved
   $ cd u
   $ hg id default
-  8902593132ae
+  068774709090
 
 now rollback and observe that 'hg serve' reloads the repository and
 presents the correct tip changeset:
 
   $ hg -R ../t rollback
-  repository tip rolled back to revision 0 (undo commit)
+  repository tip rolled back to revision 1 (undo commit)
   working directory now based on revision 0
   $ hg id default
-  23b0221f3370
+  791dd2169706
diff --git a/tests/test-url-rev.t b/tests/test-url-rev.t
--- a/tests/test-url-rev.t
+++ b/tests/test-url-rev.t
@@ -102,7 +102,6 @@ Changing original repo:
   $ cd clone
   $ hg rollback
   repository tip rolled back to revision 1 (undo push)
-  working directory now based on revision 1
 
   $ hg -q incoming
   2:faba9097cad4
@@ -147,10 +146,6 @@ No new revs, no update:
 
   $ hg rollback
   repository tip rolled back to revision 1 (undo pull)
-  working directory now based on revision 1
-
-  $ hg up -C 0
-  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
 
   $ hg parents -q
   0:1f0dee641bb7