diff --git a/lib/mix/lib/mix/deps.ex b/lib/mix/lib/mix/deps.ex
index b868a6640d2..be9569a75e8 100644
--- a/lib/mix/lib/mix/deps.ex
+++ b/lib/mix/lib/mix/deps.ex
@@ -1,4 +1,5 @@
-defrecord Mix.Dep, [scm: nil, app: nil, requirement: nil, status: nil, opts: nil, project: nil] do
+defrecord Mix.Dep, [ scm: nil, app: nil, requirement: nil, status: nil, opts: nil,
+                     project: nil, deps: [] ] do
   @moduledoc """
   This is a record that keeps information about your project
   dependencies. It keeps:
@@ -46,18 +47,29 @@ defmodule Mix.Deps do
     Mix.Deps.Project.all
   end
 
+  @doc """
+  Returns all dependencies depending on given dependencies.
+  """
+  def depending(deps, all_deps // all) do
+    dep_names = Enum.map(deps, fn dep -> dep.app end)
+    parents = Enum.filter all_deps, fn dep ->
+      Enum.any?(dep.deps, fn child_dep -> child_dep.app in dep_names end)
+    end
+    parents ++ (if parents != [], do: depending(parents, all_deps), else: [])
+  end
+
   @doc """
   Receives a list of deps names and returns deps records.
   Raises an error if the dependency does not exist.
   """
-  def by_name!(given) do
+  def by_name!(given, all_deps // all) do
     # Ensure all apps are atoms
     apps = Enum.map given, fn(app) ->
       if is_binary(app), do: binary_to_atom(app), else: app
     end
 
     # We need to keep the order of all, which properly orders deps
-    deps = Enum.filter all, fn(dep) -> dep.app in apps end
+    deps = Enum.filter all_deps, fn(dep) -> dep.app in apps end
 
     # Now we validate the given atoms
     index = Mix.Dep.__index__(:app)
@@ -70,6 +82,23 @@ defmodule Mix.Deps do
     deps
   end
 
+  @doc """
+  Runs the given `fun` inside the given dependency project by
+  changing the current working directory and loading the given
+  project into the project stack.
+  """
+  def in_dependency(Mix.Dep[app: app, opts: opts], post_config // [], fun) do
+    env     = opts[:env] || :prod
+    old_env = Mix.env
+
+    try do
+      Mix.env(env)
+      Mix.Project.in_project(app, opts[:dest], post_config, fun)
+    after
+      Mix.env(old_env)
+    end
+  end
+
   @doc """
   Formats the status of a dependency.
   """
diff --git a/lib/mix/lib/mix/deps/converger.ex b/lib/mix/lib/mix/deps/converger.ex
index e10cbb5f14c..1fc054ef788 100644
--- a/lib/mix/lib/mix/deps/converger.ex
+++ b/lib/mix/lib/mix/deps/converger.ex
@@ -23,7 +23,8 @@ defmodule Mix.Deps.Converger do
     main   = Enum.reverse Mix.Deps.Project.all
     config = [ deps_path: Path.expand(Mix.project[:deps_path]),
                root_lockfile: Path.expand(Mix.project[:lockfile]) ]
-    all(main, [], [], main, config, callback, rest)
+    { deps, rest } = all(main, [], [], main, config, callback, rest)
+    { nest_deps(deps, config), rest }
   end
 
   # We traverse the tree of dependencies in a breadth-
@@ -115,19 +116,35 @@ defmodule Mix.Deps.Converger do
     File.regular?(Path.join dep.opts[:dest], "mix.exs")
   end
 
+  # Sets the `deps` field to the child dependencies of all
+  # given dependencies and does so recursively.
+  defp nest_deps(deps, config) do
+    Enum.map deps, fn dep ->
+      nest_deps(dep, deps, config)
+    end
+  end
+
+  defp nest_deps(dep, deps, config) do
+    if available?(dep) and mixfile?(dep) do
+      nested_apps = nested_names(dep, config)
+      sub_deps = Enum.filter(deps, fn dep -> dep.app in nested_apps end)
+      dep.deps Enum.map(sub_deps, nest_deps(&1, deps, config))
+    else
+      dep
+    end
+  end
+
+  defp nested_names(dep, post_config) do
+    Mix.Deps.in_dependency dep, post_config, fn _ ->
+      Mix.Deps.Project.all_names
+    end
+  end
+
   # The dependency contains a Mixfile, so let's
   # load it and retrieve its nested dependencies.
-  defp nested_deps(Mix.Dep[app: app, opts: opts], post_config) do
-    env     = opts[:env] || :prod
-    old_env = Mix.env
-
-    try do
-      Mix.env(env)
-      Mix.Project.in_project(app, opts[:dest], post_config, fn project ->
-        { project, Enum.reverse Mix.Deps.Project.all }
-      end)
-    after
-      Mix.env(old_env)
+  defp nested_deps(dep, post_config) do
+    Mix.Deps.in_dependency dep, post_config, fn project ->
+      { project, Enum.reverse Mix.Deps.Project.all }
     end
   end
 end
diff --git a/lib/mix/lib/mix/deps/project.ex b/lib/mix/lib/mix/deps/project.ex
index c9b86c4e845..6473e88b5f1 100644
--- a/lib/mix/lib/mix/deps/project.ex
+++ b/lib/mix/lib/mix/deps/project.ex
@@ -19,6 +19,14 @@ defmodule Mix.Deps.Project do
     Enum.map deps, with_scm_and_status(&1, scms)
   end
 
+  @doc """
+  Returns all application names of current project's dependencies.
+  """
+  def all_names do
+    deps = Mix.project[:deps] || []
+    Enum.map(deps, elem(&1, 0))
+  end
+
   @doc """
   Receives a dependency and update its status.
   """
@@ -98,4 +106,4 @@ defmodule Mix.Deps.Project do
   defp vsn_match?(nil, _actual), do: true
   defp vsn_match?(expected, actual) when is_binary(expected), do: actual == expected
   defp vsn_match?(expected, actual) when is_regex(expected),  do: actual =~ expected
-end
\ No newline at end of file
+end
diff --git a/lib/mix/lib/mix/tasks/deps.compile.ex b/lib/mix/lib/mix/tasks/deps.compile.ex
index 9f604b9da69..cb556365ce5 100644
--- a/lib/mix/lib/mix/tasks/deps.compile.ex
+++ b/lib/mix/lib/mix/tasks/deps.compile.ex
@@ -24,15 +24,17 @@ defmodule Mix.Tasks.Deps.Compile do
 
   """
 
-  import Mix.Deps, only: [ all: 0, available?: 1, by_name!: 1, compile_paths: 1,
-                           format_dep: 1, make?: 1, mix?: 1, rebar?: 1 ]
+  import Mix.Deps, only: [ all: 0, available?: 1, by_name!: 2, compile_paths: 1,
+                           depending: 2, format_dep: 1, make?: 1, mix?: 1, rebar?: 1 ]
 
   def run(args) do
     case OptionParser.parse(args) do
       { _, [] } ->
         do_compile Enum.filter(all, available?(&1))
       { _, tail } ->
-        do_compile by_name!(tail)
+        all_deps = all
+        deps = by_name!(tail, all_deps)
+        do_compile(deps ++ depending(deps, all_deps))
     end
   end
 
diff --git a/lib/mix/lib/mix/tasks/deps.update.ex b/lib/mix/lib/mix/tasks/deps.update.ex
index 065040affd5..6a9d1a30589 100644
--- a/lib/mix/lib/mix/tasks/deps.update.ex
+++ b/lib/mix/lib/mix/tasks/deps.update.ex
@@ -16,13 +16,16 @@ defmodule Mix.Tasks.Deps.Update do
   * `--no-compile` skip compilation of dependencies
   """
 
-  import Mix.Deps, only: [all: 2, available?: 1, by_name!: 1, format_dep: 1]
+  import Mix.Deps, only: [ all: 0, all: 2, available?: 1, by_name!: 2,
+                           depending: 2, format_dep: 1 ]
 
   def run(args) do
     { opts, rest } = OptionParser.parse(args, switches: [no_compile: :boolean])
 
     if rest != [] do
-      deps = Enum.map by_name!(rest), check_unavailable!(&1)
+      all_deps = all
+      deps = Enum.map by_name!(rest, all_deps), check_unavailable!(&1)
+      deps = deps ++ depending(deps, all_deps)
       { _, acc } = Enum.map_reduce deps, init, deps_updater(&1, &2)
     else
       acc = all(init, deps_updater(&1, &2))
diff --git a/lib/mix/test/mix/tasks/deps_test.exs b/lib/mix/test/mix/tasks/deps_test.exs
index ce0fa4730f5..d73265348a8 100644
--- a/lib/mix/test/mix/tasks/deps_test.exs
+++ b/lib/mix/test/mix/tasks/deps_test.exs
@@ -257,7 +257,7 @@ defmodule Mix.Tasks.DepsTest do
       assert_received { :mix_shell, :info, ["Generated git_repo.app"] }
 
       Mix.Tasks.Deps.Update.run []
-      assert_received { :mix_shell, :info, ["* Updating deps_repo [path: \"custom/deps_repo\"]"] }
+      assert_received { :mix_shell, :info, ["* Updating deps_repo (0.1.0) [path: \"custom/deps_repo\"]"] }
     end
   after
     purge [GitRepo, GitRepo.Mix, DepsRepo]
@@ -290,8 +290,9 @@ defmodule Mix.Tasks.DepsTest do
 
       Mix.Task.clear
       Mix.Tasks.Deps.Update.run []
-      assert_received { :mix_shell, :info, ["* Updating deps_repo [path: \"custom/deps_repo\"]"] }
-      assert_received { :mix_shell, :info, ["* Updating bad_deps_repo [path: \"custom/bad_deps_repo\"]"] }
+
+      assert_received { :mix_shell, :info, ["* Updating deps_repo (0.1.0) [path: \"custom/deps_repo\"]"] }
+      assert_received { :mix_shell, :info, ["* Updating bad_deps_repo (0.1.0) [path: \"custom/bad_deps_repo\"]"] }
 
       Mix.Tasks.Deps.Check.run []
     end
@@ -312,4 +313,21 @@ defmodule Mix.Tasks.DepsTest do
     purge [GitRepo, GitRepo.Mix, DepsRepo, BadDepsRepo]
     Mix.Project.pop
   end
-end
\ No newline at end of file
+
+  test "update parent dependencies" do
+    Mix.Project.push NestedDepsApp
+
+    in_fixture "deps_status", fn ->
+      Mix.Tasks.Deps.Get.run []
+      Mix.Task.clear
+      Mix.Tasks.Deps.Update.run ["git_repo"]
+
+      message = "* Updating git_repo (0.1.0) [git: \"#{fixture_path("git_repo")}\"]"
+      assert_received { :mix_shell, :info, [^message] }
+      assert_received { :mix_shell, :info, ["* Updating deps_repo (0.1.0) [path: \"custom/deps_repo\"]"] }
+    end
+  after
+    purge [GitRepo, GitRepo.Mix, DepsRepo]
+    Mix.Project.pop
+  end
+end