diff --git a/py/_plugin/pytest_capture.py b/py/_plugin/pytest_capture.py
index 5004b9948..a3f0d437d 100644
--- a/py/_plugin/pytest_capture.py
+++ b/py/_plugin/pytest_capture.py
@@ -182,6 +182,8 @@ class CaptureManager:
                 outerr = (item.outerr[0] + outerr[0],
                           item.outerr[1] + outerr[1])
             return outerr
+        if hasattr(item, 'outerr'):
+            return item.outerr
         return "", ""
 
     def activate_funcargs(self, pyfuncitem):
diff --git a/py/_plugin/pytest_pdb.py b/py/_plugin/pytest_pdb.py
index 7970213f8..1414586fc 100644
--- a/py/_plugin/pytest_pdb.py
+++ b/py/_plugin/pytest_pdb.py
@@ -10,10 +10,38 @@ def pytest_addoption(parser):
                action="store_true", dest="usepdb", default=False,
                help="start the interactive Python debugger on errors.")
 
+def pytest_namespace():
+    return {'set_trace': pytestPDB().set_trace}
+
 def pytest_configure(config):
     if config.getvalue("usepdb"):
-        config.pluginmanager.register(PdbInvoke(), 'pdb')
+        config.pluginmanager.register(PdbInvoke(), 'pdbinvoke')
 
+class pytestPDB:
+    """ Pseudo PDB that defers to the real pdb. """
+    item = None
+
+    def set_trace(self):
+        """ invoke PDB set_trace debugging, dropping any IO capturing. """
+        frame = sys._getframe().f_back
+        item = getattr(self, 'item', None)
+        if item is not None:
+            capman = item.config.pluginmanager.getplugin("capturemanager")
+            out, err = capman.suspendcapture()
+            if hasattr(item, 'outerr'):
+                item.outerr = (item.outerr[0] + out, item.outerr[1] + err)
+            tw = py.io.TerminalWriter()
+            tw.line()
+            tw.sep(">", "PDB set_trace (IO-capturing turned off)")
+        py.std.pdb.Pdb().set_trace(frame)
+
+def pdbitem(item):
+    pytestPDB.item = item
+pytest_runtest_setup = pytest_runtest_call = pytest_runtest_teardown = pdbitem
+
+def pytest_runtest_makereport():
+    pytestPDB.item = None
+    
 class PdbInvoke:
     def pytest_sessionfinish(self, session):
         # don't display failures again at the end
diff --git a/py/_plugin/pytest_pytester.py b/py/_plugin/pytest_pytester.py
index fbf47e872..a020a3f83 100644
--- a/py/_plugin/pytest_pytester.py
+++ b/py/_plugin/pytest_pytester.py
@@ -351,13 +351,17 @@ class TmpTestdir:
         return self.runpybin("py.test", *args)
 
     def spawn_pytest(self, string, expect_timeout=10.0):
-        pexpect = py.test.importorskip("pexpect", "2.4")
         if self.request.config.getvalue("notoolsonpath"):
             py.test.skip("--no-tools-on-path prevents running pexpect-spawn tests")
         basetemp = self.tmpdir.mkdir("pexpect")
         invoke = self._getpybinargs("py.test")[0]
         cmd = "%s --basetemp=%s %s" % (invoke, basetemp, string)
-        child = pexpect.spawn(cmd, logfile=basetemp.join("spawn.out").open("w"))
+        return self.spawn(cmd, expect_timeout=expect_timeout)
+
+    def spawn(self, cmd, expect_timeout=10.0):
+        pexpect = py.test.importorskip("pexpect", "2.4")
+        logfile = self.tmpdir.join("spawn.out")
+        child = pexpect.spawn(cmd, logfile=logfile.open("w"))
         child.timeout = expect_timeout
         return child
 
diff --git a/testing/plugin/test_pytest_pdb.py b/testing/plugin/test_pytest_pdb.py
index 0fbca26ef..1260b0724 100644
--- a/testing/plugin/test_pytest_pdb.py
+++ b/testing/plugin/test_pytest_pdb.py
@@ -1,4 +1,5 @@
 import py
+import sys
 
 class TestPDB:
     def pytest_funcarg__pdblist(self, request):
@@ -83,3 +84,62 @@ class TestPDB:
         child.expect("1 failed")
         if child.isalive():
             child.wait()
+
+    def test_pdb_interaction_capturing_simple(self, testdir):
+        p1 = testdir.makepyfile("""
+            import py
+            def test_1():
+                i = 0
+                print ("hello17")
+                py.test.set_trace()
+                x = 3
+        """)
+        child = testdir.spawn_pytest(str(p1))
+        child.expect("test_1")
+        child.expect("x = 3")
+        child.expect("(Pdb)")
+        child.sendeof()
+        rest = child.read()
+        assert "1 failed" in rest
+        assert "def test_1" in rest
+        assert "hello17" in rest # out is captured
+        if child.isalive():
+            child.wait()
+
+    def test_pdb_interaction_capturing_twice(self, testdir):
+        p1 = testdir.makepyfile("""
+            import py
+            def test_1():
+                i = 0
+                print ("hello17")
+                py.test.set_trace()
+                x = 3
+                print ("hello18")
+                py.test.set_trace()
+                x = 4
+        """)
+        child = testdir.spawn_pytest(str(p1))
+        child.expect("test_1")
+        child.expect("x = 3")
+        child.expect("(Pdb)")
+        child.sendline('c')
+        child.expect("x = 4")
+        child.sendeof()
+        rest = child.read()
+        assert "1 failed" in rest
+        assert "def test_1" in rest
+        assert "hello17" in rest # out is captured
+        assert "hello18" in rest # out is captured
+        if child.isalive():
+            child.wait()
+
+    def test_pdb_used_outside_test(self, testdir):
+        p1 = testdir.makepyfile("""
+            import py
+            py.test.set_trace()
+            x = 5
+        """)
+        child = testdir.spawn("%s %s" %(sys.executable, p1))
+        child.expect("x = 5")
+        child.sendeof()
+        child.wait()