diff --git a/mercurial/commands.py b/mercurial/commands.py
--- a/mercurial/commands.py
+++ b/mercurial/commands.py
@@ -4961,7 +4961,6 @@ def resolve(ui, repo, *pats, **opts):
                 ms.mark(f, "u")
             else:
                 wctx = repo[None]
-                mctx = wctx.parents()[-1]
 
                 # backup pre-resolve (merge uses .orig for its own purposes)
                 a = repo.wjoin(f)
@@ -4970,7 +4969,7 @@ def resolve(ui, repo, *pats, **opts):
                 try:
                     # resolve file
                     ui.setconfig('ui', 'forcemerge', opts.get('tool', ''))
-                    if ms.resolve(f, wctx, mctx):
+                    if ms.resolve(f, wctx):
                         ret = 1
                 finally:
                     ui.setconfig('ui', 'forcemerge', '')
diff --git a/mercurial/merge.py b/mercurial/merge.py
--- a/mercurial/merge.py
+++ b/mercurial/merge.py
@@ -186,11 +186,12 @@ class mergestate(object):
     def mark(self, dfile, state):
         self._state[dfile][0] = state
         self._dirty = True
-    def resolve(self, dfile, wctx, octx):
+    def resolve(self, dfile, wctx):
         if self[dfile] == 'r':
             return 0
         stateentry = self._state[dfile]
         state, hash, lfile, afile, anode, ofile, onode, flags = stateentry
+        octx = self._repo[self._other]
         fcd = wctx[dfile]
         fco = octx[ofile]
         fca = self._repo.filectx(afile, fileid=anode)
@@ -641,7 +642,7 @@ def applyupdates(repo, actions, wctx, mc
                                  overwrite)
                 continue
             audit(fd)
-            r = ms.resolve(fd, wctx, mctx)
+            r = ms.resolve(fd, wctx)
             if r is not None and r > 0:
                 unresolved += 1
             else:
diff --git a/tests/test-backout.t b/tests/test-backout.t
--- a/tests/test-backout.t
+++ b/tests/test-backout.t
@@ -408,3 +408,93 @@ on branch1, so no file1 and file2:
   update: (current)
 
   $ cd ..
+
+
+Test usage of `hg resolve` in case of conflict
+(issue4163)
+
+  $ hg init issue4163
+  $ cd issue4163
+  $ touch foo
+  $ hg add foo
+  $ cat > foo << EOF
+  > one
+  > two
+  > three
+  > four
+  > five
+  > six
+  > seven
+  > height
+  > nine
+  > ten
+  > EOF
+  $ hg ci -m 'initial'
+  $ cat > foo << EOF
+  > one
+  > two
+  > THREE
+  > four
+  > five
+  > six
+  > seven
+  > height
+  > nine
+  > ten
+  > EOF
+  $ hg ci -m 'capital three'
+  $ cat > foo << EOF
+  > one
+  > two
+  > THREE
+  > four
+  > five
+  > six
+  > seven
+  > height
+  > nine
+  > TEN
+  > EOF
+  $ hg ci -m 'capital ten'
+  $ hg backout -r 'desc("capital three")' --tool internal:fail
+  0 files updated, 0 files merged, 0 files removed, 1 files unresolved
+  use 'hg resolve' to retry unresolved file merges
+  [1]
+  $ hg status
+  $ hg resolve -l  # still unresolved
+  U foo
+  $ hg summary
+  parent: 2:b71750c4b0fd tip
+   capital ten
+  branch: default
+  commit: 1 unresolved (clean)
+  update: (current)
+  $ hg resolve --all --debug
+  picked tool 'internal:merge' for foo (binary False symlink False)
+  merging foo
+  my foo@b71750c4b0fd+ other foo@a30dd8addae3 ancestor foo@913609522437
+   premerge successful
+  $ hg status
+  M foo
+  ? foo.orig
+  $ hg resolve -l
+  R foo
+  $ hg summary
+  parent: 2:b71750c4b0fd tip
+   capital ten
+  branch: default
+  commit: 1 modified, 1 unknown
+  update: (current)
+  $ cat foo
+  one
+  two
+  three
+  four
+  five
+  six
+  seven
+  height
+  nine
+  TEN
+
+