diff --git a/lodash.js b/lodash.js
index 54d8561ca..ce9b65c56 100644
--- a/lodash.js
+++ b/lodash.js
@@ -2005,6 +2005,7 @@
         var callback = args[3],
             stackA = args[4],
             stackB = args[5];
+            console.log(object)
       } else {
         stackA = [];
         stackB = [];
@@ -2041,9 +2042,10 @@
                 ? (isArray(value) ? value : [])
                 : (isPlainObject(value) ? value : {});
 
+              var isShallow;
               if (callback) {
                 result = callback(value, source);
-                if (typeof result != 'undefined') {
+                if ((isShallow = typeof result != 'undefined')) {
                   value = result;
                 }
               }
@@ -2052,13 +2054,14 @@
               stackB.push(value);
 
               // recursively merge objects and arrays (susceptible to call stack limits)
-              if (!callback) {
+              if (!isShallow) {
                 value = merge(value, source, indicatorObject, callback, stackA, stackB);
               }
             }
           }
           else {
             if (callback) {
+              console.log('hi')
               result = callback(value, source);
               if (typeof result == 'undefined') {
                 result = source;
diff --git a/test/test.js b/test/test.js
index 42977e53b..b6100971f 100644
--- a/test/test.js
+++ b/test/test.js
@@ -1801,8 +1801,15 @@
     });
 
     test('should handle merging if `callback` returns `undefined`', function() {
-      var actual = _.merge({ 'a': 1 }, { 'a': 2 }, function() { });
-      deepEqual(actual, { 'a': 2 });
+      var actual = _.merge({ 'a': { 'b': [1, 1] } }, { 'a': { 'b': [0] } }, function() { });
+      deepEqual(actual, { 'a': { 'b': [0, 1] } });
+    });
+
+    test('should defer to `callback` when it returns a value other than `undefined`', function() {
+      var actual = _.merge({ 'a': { 'b': [0, 1] } }, { 'a': { 'b': [2] } }, function(a, b) {
+        return _.isArray(a) ? a.concat(b) : undefined;
+      });
+      deepEqual(actual, { 'a': { 'b': [0, 1, 2] } });
     });
   }(1, 2, 3));