diff --git a/CMakeLists.txt b/CMakeLists.txt
index 2e80bd014..96bb79598 100644
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -61,6 +61,7 @@ add_library(example SHARED
   example/example9.cpp
   example/example10.cpp
   example/example11.cpp
+  example/example12.cpp
 )
 
 set_target_properties(example PROPERTIES PREFIX "")
diff --git a/README.md b/README.md
index ead5b37d7..f802d7dea 100644
--- a/README.md
+++ b/README.md
@@ -38,6 +38,7 @@ The following core C++ features can be mapped to Python
 - STL data structures
 - Smart pointers with reference counting like `std::shared_ptr`
 - Internal references with correct reference counting
+- C++ classes with virtual (and pure virtual) methods can be extended in Python
 
 ## Goodies
 In addition to the core functionality, pybind11 provides some extra goodies:
diff --git a/example/example.cpp b/example/example.cpp
index 2cc7e5056..9eea762e9 100644
--- a/example/example.cpp
+++ b/example/example.cpp
@@ -20,6 +20,7 @@ void init_ex8(py::module &);
 void init_ex9(py::module &);
 void init_ex10(py::module &);
 void init_ex11(py::module &);
+void init_ex12(py::module &);
 
 PYTHON_PLUGIN(example) {
     py::module m("example", "pybind example plugin");
@@ -35,6 +36,7 @@ PYTHON_PLUGIN(example) {
     init_ex9(m);
     init_ex10(m);
     init_ex11(m);
+    init_ex12(m);
 
     return m.ptr();
 }
diff --git a/example/example12.cpp b/example/example12.cpp
new file mode 100644
index 000000000..274edf832
--- /dev/null
+++ b/example/example12.cpp
@@ -0,0 +1,82 @@
+/*
+    example/example12.cpp -- overriding virtual functions from Python
+
+    Copyright (c) 2015 Wenzel Jakob <wenzel@inf.ethz.ch>
+
+    All rights reserved. Use of this source code is governed by a
+    BSD-style license that can be found in the LICENSE file.
+*/
+
+#include "example.h"
+#include <pybind/functional.h>
+
+/* This is an example class that we'll want to be able to extend from Python */
+class Example12  {
+public:
+    Example12(int state) : state(state) {
+        cout << "Constructing Example12.." << endl;
+    }
+
+    ~Example12() {
+        cout << "Destructing Example12.." << endl;
+    }
+
+    virtual int run(int value) {
+        std::cout << "Original implementation of Example12::run(state=" << state
+                  << ", value=" << value << ")" << std::endl;
+        return state + value;
+    }
+
+    virtual void pure_virtual() = 0;
+private:
+    int state;
+};
+
+/* This is a wrapper class that must be generated */
+class PyExample12 : public Example12 {
+public:
+    using Example12::Example12; /* Inherit constructors */
+
+    virtual int run(int value) {
+        /* Generate wrapping code that enables native function overloading */
+        PYBIND_OVERLOAD(
+            int,        /* Return type */
+            Example12,  /* Parent class */
+            run,        /* Name of function */
+            value       /* Argument(s) */
+        );
+    }
+
+    virtual void pure_virtual() {
+        PYBIND_OVERLOAD_PURE(
+            void,         /* Return type */
+            Example12,    /* Parent class */
+            pure_virtual  /* Name of function */
+                          /* This function has no arguments */
+        );
+    }
+};
+
+int runExample12(Example12 *ex, int value) {
+    return ex->run(value);
+}
+
+void runExample12Virtual(Example12 *ex) {
+    ex->pure_virtual();
+}
+
+void init_ex12(py::module &m) {
+    /* Important: use the wrapper type as a template
+       argument to class_<>, but use the original name
+       to denote the type */
+    py::class_<PyExample12>(m, "Example12")
+        /* Declare that 'PyExample12' is really an alias for the original type 'Example12' */
+        .alias<Example12>()
+        .def(py::init<int>())
+        /* Reference original class in function definitions */
+        .def("run", &Example12::run)
+        .def("pure_virtual", &Example12::pure_virtual);
+
+    m.def("runExample12", &runExample12);
+    m.def("runExample12Virtual", &runExample12Virtual);
+}
diff --git a/example/example12.py b/example/example12.py
new file mode 100644
index 000000000..4f785750b
--- /dev/null
+++ b/example/example12.py
@@ -0,0 +1,31 @@
+#!/usr/bin/env python
+from __future__ import print_function
+import sys
+sys.path.append('.')
+
+from example import Example12, runExample12, runExample12Virtual
+
+
+class ExtendedExample12(Example12):
+    def __init__(self, state):
+        super(ExtendedExample12, self).__init__(state + 1)
+        self.data = "Hello world"
+
+    def run(self, value):
+        print('ExtendedExample12::run(%i), calling parent..' % value)
+        return super(ExtendedExample12, self).run(value + 1)
+
+    def pure_virtual(self):
+        print('ExtendedExample12::pure_virtual(): %s' % self.data)
+
+
+ex12 = Example12(10)
+print(runExample12(ex12, 20))
+try:
+    runExample12Virtual(ex12)
+except Exception as e:
+    print("Caught expected exception: " + str(e))
+
+ex12p = ExtendedExample12(10)
+print(runExample12(ex12p, 20))
+runExample12Virtual(ex12p)
diff --git a/example/example5.cpp b/example/example5.cpp
index f6de5ba20..91e0b4fde 100644
--- a/example/example5.cpp
+++ b/example/example5.cpp
@@ -37,28 +37,6 @@ void dog_bark(const Dog &dog) {
     dog.bark();
 }
 
-class Example5  {
-public:
-    Example5(py::handle self, int state)
-        : self(self), state(state) {
-        cout << "Constructing Example5.." << endl;
-    }
-
-    ~Example5() {
-        cout << "Destructing Example5.." << endl;
-    }
-
-    void callback(int value) {
-		py::gil_scoped_acquire gil;
-        cout << "In Example5::callback() " << endl;
-        py::object method = self.attr("callback");
-        method.call(state, value);
-    }
-private:
-    py::handle self;
-    int state;
-};
-
 bool test_callback1(py::object func) {
     func.call();
     return false;
@@ -69,16 +47,11 @@ int test_callback2(py::object func) {
     return result.cast<int>();
 }
 
-void test_callback3(Example5 *ex, int value) {
-	py::gil_scoped_release gil;
-    ex->callback(value);
-}
-
-void test_callback4(const std::function<int(int)> &func) {
+void test_callback3(const std::function<int(int)> &func) {
     cout << "func(43) = " << func(43)<< std::endl;
 }
 
-std::function<int(int)> test_callback5() {
+std::function<int(int)> test_callback4() {
     return [](int i) { return i+1; };
 }
 
@@ -99,8 +72,4 @@ void init_ex5(py::module &m) {
     m.def("test_callback2", &test_callback2);
     m.def("test_callback3", &test_callback3);
     m.def("test_callback4", &test_callback4);
-    m.def("test_callback5", &test_callback5);
-
-    py::class_<Example5>(m, "Example5")
-        .def(py::init<py::object, int>());
 }
diff --git a/example/example5.py b/example/example5.py
index 4e75e1714..5aaaae7f4 100755
--- a/example/example5.py
+++ b/example/example5.py
@@ -24,29 +24,17 @@ from example import test_callback1
 from example import test_callback2
 from example import test_callback3
 from example import test_callback4
-from example import test_callback5
-from example import Example5
 
 def func1():
     print('Callback function 1 called!')
 
 def func2(a, b, c, d):
     print('Callback function 2 called : ' + str(a) + ", " + str(b) + ", " + str(c) + ", "+ str(d))
-    return c
-
-class MyCallback(Example5):
-    def __init__(self, value):
-        Example5.__init__(self, self, value)
-
-    def callback(self, value1, value2):
-        print('got callback: %i %i' % (value1, value2))
+    return d
 
 print(test_callback1(func1))
 print(test_callback2(func2))
 
-callback = MyCallback(3)
-test_callback3(callback, 4)
-
-test_callback4(lambda i: i+1)
-f = test_callback5()
+test_callback3(lambda i: i + 1)
+f = test_callback4()
 print("func(43) = %i" % f(43))
diff --git a/include/pybind/cast.h b/include/pybind/cast.h
index 2feaf84ee..b8eee92c4 100644
--- a/include/pybind/cast.h
+++ b/include/pybind/cast.h
@@ -601,6 +601,7 @@ template <typename T> inline object cast(const T &value, return_value_policy pol
 }
 
 template <typename T> inline T handle::cast() { return pybind::cast<T>(m_ptr); }
+template <> inline void handle::cast() { return; }
 
 template <typename... Args> inline object handle::call(Args&&... args_) {
     const size_t size = sizeof...(Args);
@@ -624,6 +625,8 @@ template <typename... Args> inline object handle::call(Args&&... args_) {
         PyTuple_SetItem(tuple, counter++, result);
     PyObject *result = PyObject_CallObject(m_ptr, tuple);
     Py_DECREF(tuple);
+    if (result == nullptr && PyErr_Occurred())
+        throw error_already_set();
     return object(result, false);
 }
 
diff --git a/include/pybind/common.h b/include/pybind/common.h
index 3a95210b5..05750c653 100644
--- a/include/pybind/common.h
+++ b/include/pybind/common.h
@@ -27,6 +27,7 @@
 #include <vector>
 #include <string>
 #include <stdexcept>
+#include <unordered_set>
 #include <unordered_map>
 #include <memory>
 
@@ -114,13 +115,6 @@ struct buffer_info {
     }
 };
 
-// C++ bindings of core Python exceptions
-struct stop_iteration    : public std::runtime_error { public: stop_iteration(const std::string &w="") : std::runtime_error(w)   {} };
-struct index_error       : public std::runtime_error { public: index_error(const std::string &w="")    : std::runtime_error(w)   {} };
-struct error_already_set : public std::exception     { public: error_already_set()                                               {} };
-/// Thrown when pybind::cast or handle::call fail due to a type casting error
-struct cast_error        : public std::runtime_error { public: cast_error(const std::string &w = "") : std::runtime_error(w) {} };
-
 NAMESPACE_BEGIN(detail)
 
 inline std::string error_string();
@@ -145,10 +139,19 @@ struct type_info {
     void *get_buffer_data = nullptr;
 };
 
+struct overload_hash {
+    inline std::size_t operator()(const std::pair<const PyObject *, const char *>& v) const {
+        size_t value = std::hash<const void *>()(v.first);
+        value ^= std::hash<const void *>()(v.second)  + 0x9e3779b9 + (value<<6) + (value>>2);
+        return value;
+    }
+};
+
 /// Internal data struture used to track registered instances and types
 struct internals {
     std::unordered_map<const std::type_info *, type_info> registered_types;
-    std::unordered_map<void *, PyObject *> registered_instances;
+    std::unordered_map<const void *, PyObject *> registered_instances;
+    std::unordered_set<std::pair<const PyObject *, const char *>, overload_hash> inactive_overload_cache;
 };
 
 /// Return a reference to the current 'internals' information
@@ -176,5 +179,20 @@ template <typename T, size_t N> struct decay<T[N]>       { typedef typename deca
 /// Helper type to replace 'void' in some expressions
 struct void_type { };
 
+/// to_string variant which also accepts strings
+template <typename T> inline typename std::enable_if<!std::is_enum<T>::value, std::string>::type
+to_string(const T &value) { return std::to_string(value); }
+template <> inline std::string to_string(const std::string &value) { return value; }
+template <typename T> inline typename std::enable_if<std::is_enum<T>::value, std::string>::type
+to_string(T value) { return std::to_string((int) value); }
+
 NAMESPACE_END(detail)
+
+// C++ bindings of core Python exceptions
+struct stop_iteration    : public std::runtime_error { public: stop_iteration(const std::string &w="") : std::runtime_error(w)   {} };
+struct index_error       : public std::runtime_error { public: index_error(const std::string &w="")    : std::runtime_error(w)   {} };
+struct error_already_set : public std::runtime_error { public: error_already_set() : std::runtime_error(detail::error_string())  {} };
+/// Thrown when pybind::cast or handle::call fail due to a type casting error
+struct cast_error        : public std::runtime_error { public: cast_error(const std::string &w = "") : std::runtime_error(w)     {} };
+
 NAMESPACE_END(pybind)
diff --git a/include/pybind/functional.h b/include/pybind/functional.h
index f300d4d4d..7c3c9a006 100644
--- a/include/pybind/functional.h
+++ b/include/pybind/functional.h
@@ -25,8 +25,6 @@ public:
         object src(src_, true);
         value = [src](Args... args) -> Return {
             object retval(pybind::handle(src).call(std::move(args)...));
-            if (retval.ptr() == nullptr && PyErr_Occurred())
-                throw error_already_set();
             /* Visual studio 2015 parser issue: need parentheses around this expression */
             return (retval.template cast<Return>());
         };
diff --git a/include/pybind/pybind.h b/include/pybind/pybind.h
index 156e5705c..699489c32 100644
--- a/include/pybind/pybind.h
+++ b/include/pybind/pybind.h
@@ -24,7 +24,6 @@
 #endif
 
 #include <pybind/cast.h>
-#include <iostream>
 
 NAMESPACE_BEGIN(pybind)
 
@@ -46,12 +45,8 @@ template <typename T> inline arg_t<T> arg::operator=(const T &value) { return ar
 
 /// Annotation for methods
 struct is_method {
-#if PY_MAJOR_VERSION < 3
     PyObject *class_;
     is_method(object *o) : class_(o->ptr()) { }
-#else
-    is_method(object *) { }
-#endif
 };
 
 /// Annotation for documentation
@@ -76,9 +71,7 @@ private:
         short keywords = 0;
         return_value_policy policy = return_value_policy::automatic;
         std::string signature;
-#if PY_MAJOR_VERSION < 3
         PyObject *class_ = nullptr;
-#endif
         PyObject *sibling = nullptr;
         const char *doc = nullptr;
         function_entry *next = nullptr;
@@ -126,21 +119,18 @@ private:
             kw[entry->keywords++] = "self";
         kw[entry->keywords++] = a.name;
     }
+
     template <typename T>
     static void process_extra(const pybind::arg_t<T> &a, function_entry *entry, const char **kw, const char **def) {
         if (entry->is_method && entry->keywords == 0)
             kw[entry->keywords++] = "self";
         kw[entry->keywords] = a.name;
-        def[entry->keywords++] = strdup(std::to_string(a.value).c_str());
+        def[entry->keywords++] = strdup(detail::to_string(a.value).c_str());
     }
 
     static void process_extra(const pybind::is_method &m, function_entry *entry, const char **, const char **) {
         entry->is_method = true;
-#if PY_MAJOR_VERSION < 3
         entry->class_ = m.class_;
-#else
-        (void) m;
-#endif
     }
     static void process_extra(const pybind::return_value_policy p, function_entry *entry, const char **, const char **) { entry->policy = p; }
     static void process_extra(pybind::sibling s, function_entry *entry, const char **, const char **) { entry->sibling = s.value; }
@@ -366,35 +356,38 @@ private:
             m_entry->sibling = PyMethod_GET_FUNCTION(m_entry->sibling);
 #endif
 
-        function_entry *entry = m_entry;
-        bool overloaded = false;
-        if (!entry->sibling || !PyCFunction_Check(entry->sibling)) {
-            entry->def = new PyMethodDef();
-            memset(entry->def, 0, sizeof(PyMethodDef));
-            entry->def->ml_name = entry->name;
-            entry->def->ml_meth = reinterpret_cast<PyCFunction>(*dispatcher);
-            entry->def->ml_flags = METH_VARARGS | METH_KEYWORDS;
-            capsule entry_capsule(entry, [](PyObject *o) { destruct((function_entry *) PyCapsule_GetPointer(o, nullptr)); });
-            m_ptr = PyCFunction_New(entry->def, entry_capsule.ptr());
+        function_entry *s_entry = nullptr, *entry = m_entry;
+        if (m_entry->sibling && PyCFunction_Check(m_entry->sibling)) {
+            capsule entry_capsule(PyCFunction_GetSelf(m_entry->sibling), true);
+            s_entry = (function_entry *) entry_capsule;
+            if (s_entry->class_ != m_entry->class_)
+                s_entry = nullptr; /* Method override */
+        }
+
+        if (!s_entry) {
+            m_entry->def = new PyMethodDef();
+            memset(m_entry->def, 0, sizeof(PyMethodDef));
+            m_entry->def->ml_name = m_entry->name;
+            m_entry->def->ml_meth = reinterpret_cast<PyCFunction>(*dispatcher);
+            m_entry->def->ml_flags = METH_VARARGS | METH_KEYWORDS;
+            capsule entry_capsule(m_entry, [](PyObject *o) { destruct((function_entry *) PyCapsule_GetPointer(o, nullptr)); });
+            m_ptr = PyCFunction_New(m_entry->def, entry_capsule.ptr());
             if (!m_ptr)
                 throw std::runtime_error("cpp_function::cpp_function(): Could not allocate function object");
         } else {
-            m_ptr = entry->sibling;
+            m_ptr = m_entry->sibling;
             inc_ref();
-            capsule entry_capsule(PyCFunction_GetSelf(m_ptr), true);
-            function_entry *parent = (function_entry *) entry_capsule, *backup = parent;
-            while (parent->next)
-                parent = parent->next;
-            parent->next = entry;
-            entry = backup;
-            overloaded = true;
+            entry = s_entry;
+            while (s_entry->next)
+                s_entry = s_entry->next;
+            s_entry->next = m_entry;
         }
 
         std::string signatures;
         int index = 0;
         function_entry *it = entry;
         while (it) { /* Create pydoc it */
-            if (overloaded)
+            if (s_entry)
                 signatures += std::to_string(++index) + ". ";
             signatures += "Signature : " + std::string(it->signature) + "\n";
             if (it->doc && strlen(it->doc) > 0)
@@ -783,6 +776,12 @@ public:
         metaclass().attr(name) = property;
         return *this;
     }
+
+    template <typename target> class_ alias() {
+        auto &instances = pybind::detail::get_internals().registered_types;
+        instances[&typeid(target)] = instances[&typeid(type)];
+        return *this;
+    }
 private:
     static void init_holder(PyObject *inst_) {
         instance_type *inst = (instance_type *) inst_;
@@ -882,6 +881,43 @@ public:
     inline ~gil_scoped_release() { PyEval_RestoreThread(state); }
 };
 
+inline function get_overload(const void *this_ptr, const char *name)  {
+    handle py_object = detail::get_object_handle(this_ptr);
+    handle type = py_object.get_type();
+    auto key = std::make_pair(type.ptr(), name);
+
+    /* Cache functions that aren't overloaded in python to avoid
+       many costly dictionary lookups in Python */
+    auto &cache = detail::get_internals().inactive_overload_cache;
+    if (cache.find(key) != cache.end())
+        return function();
+
+    function overload = (function) py_object.attr(name);
+    if (overload.is_cpp_function()) {
+        cache.insert(key);
+        return function();
+    }
+    PyFrameObject *frame = PyThreadState_Get()->frame;
+    pybind::str caller = pybind::handle(frame->f_code->co_name).str();
+    if (strcmp((const char *) caller, name) == 0)
+        return function();
+    return overload;
+}
+
+#define PYBIND_OVERLOAD_INT(ret_type, class_name, name, ...) { \
+        pybind::gil_scoped_acquire gil; \
+        pybind::function overload = pybind::get_overload(this, #name); \
+        if (overload) \
+            return overload.call(__VA_ARGS__).cast<ret_type>();  }
+
+#define PYBIND_OVERLOAD(ret_type, class_name, name, ...) \
+    PYBIND_OVERLOAD_INT(ret_type, class_name, name, __VA_ARGS__) \
+    return class_name::name(__VA_ARGS__)
+
+#define PYBIND_OVERLOAD_PURE(ret_type, class_name, name, ...) \
+    PYBIND_OVERLOAD_INT(ret_type, class_name, name, __VA_ARGS__) \
+    throw std::runtime_error("Tried to call pure virtual function \"" #name "\"");
+
 NAMESPACE_END(pybind)
 
 #if defined(_MSC_VER)
diff --git a/include/pybind/pytypes.h b/include/pybind/pytypes.h
index 4559ffbcb..8afc08877 100644
--- a/include/pybind/pytypes.h
+++ b/include/pybind/pytypes.h
@@ -331,10 +331,12 @@ public:
         PyObject *ptr = m_ptr;
         if (ptr == nullptr)
             return false;
-#if PY_MAJOR_VERSION < 3
+#if PY_MAJOR_VERSION >= 3
+        if (PyInstanceMethod_Check(ptr))
+            ptr = PyInstanceMethod_GET_FUNCTION(ptr);
+#endif
         if (PyMethod_Check(ptr))
             ptr = PyMethod_GET_FUNCTION(ptr);
-#endif
         return PyCFunction_Check(ptr);
     }
 };