diff --git a/spec/observables/dom/ajax-spec.ts b/spec/observables/dom/ajax-spec.ts
index 598427dd0b..1d8ef27591 100644
--- a/spec/observables/dom/ajax-spec.ts
+++ b/spec/observables/dom/ajax-spec.ts
@@ -380,6 +380,38 @@ describe('Observable.ajax', () => {
     });
   });
 
+  it('should error on timeout of asynchronous request', (done) => {
+    const obj: Rx.AjaxRequest = {
+      url: '/flibbertyJibbet',
+      responseType: 'text',
+      timeout: 10
+    };
+
+    Rx.Observable.ajax(obj)
+      .subscribe((x: any) => {
+        throw 'should not have been called';
+      }, (e) => {
+        expect(e.status).to.equal(0);
+        expect(e.xhr.method).to.equal('GET');
+        expect(e.xhr.async).to.equal(true);
+        expect(e.xhr.timeout).to.equal(10);
+        expect(e.xhr.responseType).to.equal('text');
+      });
+
+    const request = MockXMLHttpRequest.mostRecent;
+
+    expect(request.url).to.equal('/flibbertyJibbet');
+
+    setTimeout(() => {
+      request.respondWith({
+        'status': 200,
+        'contentType': 'text/plain',
+        'responseText': 'Wee! I am text!'
+      });
+      done();
+    }, 1000);
+  });
+
   it('should create a synchronous request', () => {
     const obj: Rx.AjaxRequest = {
       url: '/flibbertyJibbet',
@@ -1028,8 +1060,20 @@ class MockXMLHttpRequest {
     MockXMLHttpRequest.requests.push(this);
   }
 
+  timeout: number;
+
   send(data: any): void {
     this.data = data;
+    if (this.timeout && this.timeout > 0) {
+      setTimeout(() => {
+        if (this.readyState != 4) {
+          this.readyState = 4;
+          this.status = 0;
+          this.triggerEvent('readystatechange');
+          this.triggerEvent('timeout');
+        }
+      }, this.timeout);
+    }
   }
 
   open(method: any, url: any, async: any, user: any, password: any): void {
@@ -1039,7 +1083,7 @@ class MockXMLHttpRequest {
     this.user = user;
     this.password = password;
     this.readyState = 1;
-    this.triggerEvent('readyStateChange');
+    this.triggerEvent('readystatechange');
     const originalProgressHandler = this.upload.onprogress;
     Object.defineProperty(this.upload, 'progress', {
       get() {
@@ -1052,24 +1096,6 @@ class MockXMLHttpRequest {
     this.requestHeaders[key] = value;
   }
 
-  addEventListener(name: string, handler: any): void {
-    this.eventHandlers.push({ name: name, handler: handler });
-  }
-
-  removeEventListener(name: string, handler: any): void {
-    for (let i = this.eventHandlers.length - 1; i--; ) {
-      let eh = this.eventHandlers[i];
-      if (eh.name === name && eh.handler === handler) {
-        this.eventHandlers.splice(i, 1);
-      }
-    }
-  }
-
-  throwError(err: any): void {
-    // TODO: something better with errors
-    this.triggerEvent('error');
-  }
-
   protected jsonResponseValue(response: any) {
     try {
       this.response = JSON.parse(response.responseText);
@@ -1117,17 +1143,11 @@ class MockXMLHttpRequest {
 
   triggerEvent(name: any, eventObj?: any): void {
     // TODO: create a better default event
-    const e: any = eventObj || {};
+    const e: any = eventObj || { type: name };
 
     if (this['on' + name]) {
       this['on' + name](e);
     }
-
-    this.eventHandlers.forEach(function (eh) {
-      if (eh.name === name) {
-        eh.handler.call(this, e);
-      }
-    });
   }
 
   triggerUploadEvent(name: any, eventObj?: any): void {
diff --git a/src/internal/observable/dom/AjaxObservable.ts b/src/internal/observable/dom/AjaxObservable.ts
index d708d39c69..e243d487ae 100644
--- a/src/internal/observable/dom/AjaxObservable.ts
+++ b/src/internal/observable/dom/AjaxObservable.ts
@@ -353,7 +353,15 @@ export class AjaxSubscriber<T> extends Subscriber<Event> {
     }
 
     function xhrReadyStateChange(this: XMLHttpRequest, e: Event) {
-      const { subscriber, progressSubscriber, request } = (<any>xhrReadyStateChange);
+      return;
+    }
+    xhr.onreadystatechange = xhrReadyStateChange;
+    (<any>xhrReadyStateChange).subscriber = this;
+    (<any>xhrReadyStateChange).progressSubscriber = progressSubscriber;
+    (<any>xhrReadyStateChange).request = request;
+
+    function xhrLoad(this: XMLHttpRequest, e: Event) {
+      const { subscriber, progressSubscriber, request } = (<any>xhrLoad);
       if (this.readyState === 4) {
         // normalize IE9 bug (http://bugs.jquery.com/ticket/1450)
         let status: number = this.status === 1223 ? 204 : this.status;
@@ -382,10 +390,10 @@ export class AjaxSubscriber<T> extends Subscriber<Event> {
         }
       }
     }
-    xhr.onreadystatechange = xhrReadyStateChange;
-    (<any>xhrReadyStateChange).subscriber = this;
-    (<any>xhrReadyStateChange).progressSubscriber = progressSubscriber;
-    (<any>xhrReadyStateChange).request = request;
+    xhr.onload = xhrLoad;
+    (<any>xhrLoad).subscriber = this;
+    (<any>xhrLoad).progressSubscriber = progressSubscriber;
+    (<any>xhrLoad).request = request;
   }
 
   unsubscribe() {