diff --git a/lib/axios.js b/lib/axios.js
index aa741f0004680516c3e8197c0aae38201fcfa324..ed1f5194131787b20f6e10d3571d7bc616e92c87 100644
--- a/lib/axios.js
+++ b/lib/axios.js
@@ -3,6 +3,7 @@
 var utils = require('./utils');
 var bind = require('./helpers/bind');
 var Axios = require('./core/Axios');
+var defaults = require('./defaults');
 
 /**
  * Create an instance of Axios
@@ -24,14 +25,14 @@ function createInstance(defaultConfig) {
 }
 
 // Create the default instance to be exported
-var axios = createInstance();
+var axios = createInstance(defaults);
 
 // Expose Axios class to allow class inheritance
 axios.Axios = Axios;
 
 // Factory for creating new instances
-axios.create = function create(defaultConfig) {
-  return createInstance(defaultConfig);
+axios.create = function create(instanceConfig) {
+  return createInstance(utils.merge(defaults, instanceConfig));
 };
 
 // Expose Cancel & CancelToken
diff --git a/lib/core/Axios.js b/lib/core/Axios.js
index 5ace5cb0d1d63219fc304251cb204b5e3a6a3586..cda4b5d9063b902b58192a626e7e5bc293efa90e 100644
--- a/lib/core/Axios.js
+++ b/lib/core/Axios.js
@@ -10,10 +10,10 @@ var combineURLs = require('./../helpers/combineURLs');
 /**
  * Create a new instance of Axios
  *
- * @param {Object} defaultConfig The default config for the instance
+ * @param {Object} instanceConfig The default config for the instance
  */
-function Axios(defaultConfig) {
-  this.defaults = utils.merge(defaults, defaultConfig);
+function Axios(instanceConfig) {
+  this.defaults = instanceConfig;
   this.interceptors = {
     request: new InterceptorManager(),
     response: new InterceptorManager()
diff --git a/test/specs/defaults.spec.js b/test/specs/defaults.spec.js
index f912d89f33c5b76f7599ba35fbd8893cd8f4ea93..de19b6ae4c09d8898332933f01ae68bb6b5f1627 100644
--- a/test/specs/defaults.spec.js
+++ b/test/specs/defaults.spec.js
@@ -136,4 +136,27 @@ describe('defaults', function () {
     });
   });
 
+  it('should be used by custom instance if set before instance created', function (done) {
+    axios.defaults.baseURL = 'http://example.org/';
+    var instance = axios.create();
+
+    instance.get('/foo');
+
+    getAjaxRequest().then(function (request) {
+      expect(request.url).toBe('http://example.org/foo');
+      done();
+    });
+  });
+
+  it('should be used by custom instance if set after instance created', function (done) {
+    var instance = axios.create();
+    axios.defaults.baseURL = 'http://example.org/';
+
+    instance.get('/foo');
+
+    getAjaxRequest().then(function (request) {
+      expect(request.url).toBe('http://example.org/foo');
+      done();
+    });
+  });
 });