diff --git a/lib/dao.js b/lib/dao.js
index 326b64f0..58c93efb 100644
--- a/lib/dao.js
+++ b/lib/dao.js
@@ -445,8 +445,8 @@ DataAccessObject.updateOrCreate = DataAccessObject.upsert = function upsert(data
         data = ctx.data;
         var update = data;
         var inst = data;
-        if(!(data instanceof Model)) {
-          inst = new Model(data);
+        if (!(data instanceof Model)) {
+          inst = new Model(data, { applyDefaultValues: false });
         }
         update = inst.toObject(false);
 
diff --git a/lib/model.js b/lib/model.js
index 4fa08eda..efd533ef 100644
--- a/lib/model.js
+++ b/lib/model.js
@@ -43,6 +43,9 @@ function ModelBaseClass(data, options) {
     // Default to true
     options.applySetters = true;
   }
+  if (!('applyDefaultValues' in options)) {
+    options.applyDefaultValues = true;
+  }
   this._initProperties(data, options);
 }
 
@@ -51,6 +54,7 @@ function ModelBaseClass(data, options) {
  * @param {Object} data The data object
  * @param {Object} options An object to control the instantiation
  * @property {Boolean} applySetters Controls if the setters will be applied
+ * @property {Boolean} applyDefaultValues Default attributes and values will be applied
  * @property {Boolean} strict Set the instance level strict mode
  * @property {Boolean} persisted Whether the instance has been persisted
  * @private
@@ -72,6 +76,7 @@ ModelBaseClass.prototype._initProperties = function (data, options) {
 
   options = options || {};
   var applySetters = options.applySetters;
+  var applyDefaultValues = options.applyDefaultValues;
   var strict = options.strict;
 
   if(strict === undefined) {
@@ -243,7 +248,7 @@ ModelBaseClass.prototype._initProperties = function (data, options) {
     var type = properties[p].type;
 
     // Set default values
-    if (propVal === undefined) {
+    if (applyDefaultValues && propVal === undefined) {
       var def = properties[p]['default'];
       if (def !== undefined) {
         if (typeof def === 'function') {
@@ -265,7 +270,7 @@ ModelBaseClass.prototype._initProperties = function (data, options) {
     }
 
     // Set default value using a named function
-    if (propVal === undefined) {
+    if (applyDefaultValues && propVal === undefined) {
       var defn = properties[p].defaultFn;
       switch (defn) {
         case undefined:
diff --git a/test/defaults.test.js b/test/defaults.test.js
index 8c3e89a2..6a05e0c4 100644
--- a/test/defaults.test.js
+++ b/test/defaults.test.js
@@ -9,7 +9,8 @@ describe('defaults', function () {
   before(function () {
     Server = db.define('Server', {
       host: String,
-      port: {type: Number, default: 80}
+      port: {type: Number, default: 80},
+      createdAt: {type: Date, default: '$now'}
     });
   });
 
@@ -49,4 +50,23 @@ describe('defaults', function () {
     });
   });
 
+  it('should apply defaults in upsert create', function (done) {
+    Server.upsert({port: 8181 }, function(err, server) {
+      should.not.exist(err);
+      should.exist(server.createdAt);
+      done();
+    });
+  });
+
+  it('should preserve defaults in upsert update', function (done) {
+    Server.findOne({}, function(err, server) {
+      Server.upsert({id:server.id, port: 1337 }, function(err, s) {
+        should.not.exist(err);
+        (Number(1337)).should.equal(s.port);
+        server.createdAt.should.eql(s.createdAt);
+        done();
+      });
+    });
+  });
+
 });