diff --git a/modules/field/field.info.inc b/modules/field/field.info.inc
index f435d99a6357d981e3d4e5a77e34275880a590a4..c3b29573f856c48453cae86ded2fe8fc884a33a4 100644
--- a/modules/field/field.info.inc
+++ b/modules/field/field.info.inc
@@ -24,6 +24,8 @@
  * are affected.
  */
 function field_info_cache_clear() {
+  drupal_static_reset('field_view_mode_settings');
+
   // @todo: Remove this when field_attach_*_bundle() bundle management
   // functions are moved to the entity API.
   entity_info_cache_clear();
@@ -273,7 +275,7 @@ function _field_info_prepare_field($field) {
  * Prepares an instance definition for the current run-time context.
  *
  * Since the instance was last saved or updated, a number of things might have
- * changed: widgets or formatters disabled, new settings expected, new build
+ * changed: widgets or formatters disabled, new settings expected, new view
  * modes added...
  *
  * @param $instance
@@ -301,16 +303,21 @@ function _field_info_prepare_instance($instance, $field) {
     $instance['display'][$view_mode] = _field_info_prepare_instance_display($field, $display);
   }
 
-  // Fallback to 'hidden' for unspecified view modes.
+  // Fallback to 'hidden' for view modes configured to use custom display
+  // settings, and for which the instance has no explicit settings.
   $entity_info = entity_get_info($instance['entity_type']);
-  foreach ($entity_info['view modes'] as $view_mode => $info) {
-    if (!isset($instance['display'][$view_mode])) {
-      $instance['display'][$view_mode] = array(
-        'type' => 'hidden',
-        'label' => 'above',
-        'settings' => array(),
-        'weight' => 0,
-      );
+  $view_modes = array_merge(array('default'), array_keys($entity_info['view modes']));
+  $view_mode_settings = field_view_mode_settings($instance['entity_type'], $instance['bundle']);
+  foreach ($view_modes as $view_mode) {
+    if ($view_mode == 'default' || !empty($view_mode_settings[$view_mode]['custom_settings'])) {
+      if (!isset($instance['display'][$view_mode])) {
+        $instance['display'][$view_mode] = array(
+          'type' => 'hidden',
+          'label' => 'above',
+          'settings' => array(),
+          'weight' => 0,
+        );
+      }
     }
   }
 
diff --git a/modules/field/field.module b/modules/field/field.module
index 823b0f24c010f94576bb34dad9f9c5c71cc5b5f5..d3545d911077873594e3bab213ddfb4c803afeb1 100644
--- a/modules/field/field.module
+++ b/modules/field/field.module
@@ -369,7 +369,7 @@ function _field_sort_items_value_helper($a, $b) {
  *       'extra_field_2' => ...
  *     ),
  *   ),
- * ),
+ * );
  * @endcode
  *
  * @param $entity_type
@@ -387,8 +387,8 @@ function field_bundle_settings($entity_type, $bundle, $settings = NULL) {
 
   if (isset($settings)) {
     $stored_settings[$entity_type][$bundle] = $settings;
+
     variable_set('field_bundle_settings', $stored_settings);
-    drupal_static_reset('field_view_mode_settings');
     field_info_cache_clear();
   }
   else {
@@ -397,6 +397,10 @@ function field_bundle_settings($entity_type, $bundle, $settings = NULL) {
       'view_modes' => array(),
       'extra_fields' => array(),
     );
+    $settings['extra_fields'] += array(
+      'form' => array(),
+      'display' => array(),
+    );
 
     return $settings;
   }
diff --git a/modules/field_ui/field_ui.admin.inc b/modules/field_ui/field_ui.admin.inc
index 27ff1e03ad69617335a5900c9f647f6ee8a9640c..c88a51251d05725fb02c9dc4d27f961a2492a9f2 100644
--- a/modules/field_ui/field_ui.admin.inc
+++ b/modules/field_ui/field_ui.admin.inc
@@ -1267,19 +1267,23 @@ function field_ui_display_overview_form_submit($form, &$form_state) {
 
   // Save data for 'regular' fields.
   foreach ($form['#fields'] as $field_name) {
-    $instance = field_info_instance($entity_type, $field_name, $bundle);
+    // Retrieve the stored instance settings to merge with the incoming values.
+    $instance = field_read_instance($entity_type, $field_name, $bundle);
     $values = $form_values['fields'][$field_name];
     // Get formatter settings. They lie either directly in submitted form
     // values (if the whole form was submitted while some formatter
     // settings were being edited), or have been persisted in
     // $form_state.
-    $settings = $instance['display'][$view_mode]['settings'];
+    $settings = array();
     if (isset($values['settings_edit_form']['settings'])) {
       $settings = $values['settings_edit_form']['settings'];
     }
     elseif (isset($form_state['formatter_settings'][$field_name])) {
       $settings = $form_state['formatter_settings'][$field_name];
     }
+    elseif (isset($instance['display'][$view_mode]['settings'])) {
+      $settings = $instance['display'][$view_mode]['settings'];
+    }
 
     // Only save settings actually used by the selected formatter.
     $default_settings = field_info_formatter_settings($values['type']);
@@ -1311,10 +1315,14 @@ function field_ui_display_overview_form_submit($form, &$form_state) {
     foreach ($form_values['view_modes_custom'] as $view_mode_name => $value) {
       // Display a message for each view mode newly configured to use custom
       // settings.
-      if (!empty($value) && empty($bundle_settings['view_modes'][$view_mode_name]['custom_settings'])) {
+      $view_mode_settings = field_view_mode_settings($entity_type, $bundle);
+      if (!empty($value) && empty($view_mode_settings[$view_mode_name]['custom_settings'])) {
         $view_mode_label = $entity_info['view modes'][$view_mode_name]['label'];
         $path = _field_ui_bundle_admin_path($entity_type, $bundle) . "/display/$view_mode_name";
         drupal_set_message(t('The %view_mode mode now uses custom display settings. You might want to <a href="@url">configure them</a>.', array('%view_mode' => $view_mode_label, '@url' => url($path))));
+        // Initialize the newly customized view mode with the display settings
+        // from the default view mode.
+        _field_ui_add_default_view_mode_settings($entity_type, $bundle, $view_mode_name, $bundle_settings);
       }
       $bundle_settings['view_modes'][$view_mode_name]['custom_settings'] = !empty($value);
     }
@@ -1326,6 +1334,50 @@ function field_ui_display_overview_form_submit($form, &$form_state) {
   drupal_set_message(t('Your settings have been saved.'));
 }
 
+/**
+ * Helper function for field_ui_display_overview_form_submit().
+ *
+ * When an administrator decides to use custom display settings for a view mode,
+ * that view mode needs to be initialized with the display settings for the
+ * 'default' view mode, which it was previously using. This helper function
+ * adds the new custom display settings to this bundle's instances, and saves
+ * them. It also modifies the passed-in $settings array, which the caller can
+ * then save using field_bundle_settings().
+ *
+ * @see field_bundle_settings()
+ *
+ * @param $entity_type
+ *   The bundle's entity type.
+ * @param $bundle
+ *   The bundle whose view mode is being customized.
+ * @param $view_mode
+ *   The view mode that the administrator has set to use custom settings.
+ * @param $settings
+ *   An associative array of bundle settings, as expected by
+ *   field_bundle_settings().
+ */
+function _field_ui_add_default_view_mode_settings($entity_type, $bundle, $view_mode, &$settings) {
+  // Update display settings for field instances.
+  $instances = field_read_instances(array('entity_type' => $entity_type, 'bundle' => $bundle));
+  foreach ($instances as $instance) {
+    // If this field instance has display settings defined for this view mode,
+    // respect those settings.
+    if (!isset($instance['display'][$view_mode])) {
+      // The instance doesn't specify anything for this view mode, so use the
+      // default display settings.
+      $instance['display'][$view_mode] = $instance['display']['default'];
+      field_update_instance($instance);
+    }
+  }
+
+  // Update display settings for 'extra fields'.
+  foreach (array_keys($settings['extra_fields']['display']) as $name) {
+    if (!isset($settings['extra_fields']['display'][$name][$view_mode])) {
+      $settings['extra_fields']['display'][$name][$view_mode] = $settings['extra_fields']['display'][$name]['default'];
+    }
+  }
+}
+
 /**
  * Return an array of field_type options.
  */
@@ -1537,17 +1589,24 @@ function field_ui_field_settings_form_submit($form, &$form_state) {
  * Menu callback; select a widget for the field.
  */
 function field_ui_widget_type_form($form, &$form_state, $instance) {
+  drupal_set_title($instance['label']);
+
   $bundle = $instance['bundle'];
   $entity_type = $instance['entity_type'];
-  $field = field_info_field($instance['field_name']);
-
-  drupal_set_title($instance['label']);
+  $field_name = $instance['field_name'];
 
+  $field = field_info_field($field_name);
   $field_type = field_info_field_types($field['type']);
   $widget_type = field_info_widget_types($instance['widget']['type']);
   $bundles = field_info_bundles();
   $bundle_label = $bundles[$entity_type][$bundle]['label'];
 
+  $form = array(
+    '#bundle' => $bundle,
+    '#entity_type' => $entity_type,
+    '#field_name' => $field_name,
+  );
+
   $form['basic'] = array(
     '#type' => 'fieldset',
     '#title' => t('Change widget'),
@@ -1561,7 +1620,6 @@ function field_ui_widget_type_form($form, &$form_state, $instance) {
     '#description' => t('The type of form element you would like to present to the user when creating this field in the %type type.', array('%type' => $bundle_label)),
   );
 
-  $form['#instance'] = $instance;
   $form['actions'] = array('#type' => 'actions');
   $form['actions']['submit'] = array('#type' => 'submit', '#value' => t('Continue'));
 
@@ -1576,9 +1634,12 @@ function field_ui_widget_type_form($form, &$form_state, $instance) {
  */
 function field_ui_widget_type_form_submit($form, &$form_state) {
   $form_values = $form_state['values'];
-  $instance = $form['#instance'];
-  $bundle = $instance['bundle'];
-  $entity_type = $instance['entity_type'];
+  $bundle = $form['#bundle'];
+  $entity_type = $form['#entity_type'];
+  $field_name = $form['#field_name'];
+
+  // Retrieve the stored instance settings to merge with the incoming values.
+  $instance = field_read_instance($entity_type, $field_name, $bundle);
 
   // Set the right module information.
   $widget_type = field_info_widget_types($form_values['widget_type']);
@@ -1586,6 +1647,7 @@ function field_ui_widget_type_form_submit($form, &$form_state) {
 
   $instance['widget']['type'] = $form_values['widget_type'];
   $instance['widget']['module'] = $widget_module;
+
   try {
     field_update_instance($instance);
     drupal_set_message(t('Changed the widget for field %label.', array('%label' => $instance['label'])));
@@ -1912,8 +1974,8 @@ function field_ui_field_edit_form_submit($form, &$form_state) {
   field_default_submit(NULL, NULL, $field, $instance, LANGUAGE_NONE, $items, $form, $form_state);
   $instance['default_value'] = $items ? $items : NULL;
 
-  // Update the instance settings.
-  $instance_source = field_info_instance($instance['entity_type'], $instance['field_name'], $instance['bundle']);
+  // Retrieve the stored instance settings to merge with the incoming values.
+  $instance_source = field_read_instance($instance['entity_type'], $instance['field_name'], $instance['bundle']);
   $instance = array_merge($instance_source, $instance);
   field_update_instance($instance);
 
diff --git a/modules/field_ui/field_ui.test b/modules/field_ui/field_ui.test
index 43649df287518ed529bb7d271af2b3c2386e0a14..f1102488c5364b7db93d9da6745ba0a07748b816 100644
--- a/modules/field_ui/field_ui.test
+++ b/modules/field_ui/field_ui.test
@@ -470,4 +470,151 @@ class FieldUIManageDisplayTestCase extends FieldUITestCase {
     $this->assertEqual($current_format, $format, t('The formatter was updated.'));
     $this->assertEqual($current_setting_value, $setting_value, t('The setting was updated.'));
   }
+
+  /**
+   * Test switching view modes to use custom or 'default' settings'.
+   */
+  function testViewModeCustom() {
+    // Create a field, and a node with some data for the field.
+    $edit = array(
+      'fields[_add_new_field][label]' => 'Test field',
+      'fields[_add_new_field][field_name]' => 'field_test',
+    );
+    $this->fieldUIAddNewField('admin/structure/types/manage/' . $this->hyphen_type, $edit);
+    $value = rand(1, 100);
+    $settings = array(
+      'type' => $this->type,
+      'field_test' => array(LANGUAGE_NONE => array(array('value' => $value))),
+    );
+    $node = $this->drupalCreateNode($settings);
+
+    // Gather expected output values with the various formatters.
+    $formatters = field_info_formatter_types();
+    $output = array(
+      'field_test_default' => $formatters['field_test_default']['settings']['test_formatter_setting'] . '|' . $value,
+      'field_test_with_prepare_view' => $formatters['field_test_with_prepare_view']['settings']['test_formatter_setting_additional'] . '|' . $value. '|' . ($value + 1),
+    );
+
+    // Check that the field is displayed with the default formatter in 'rss'
+    // mode (uses 'default'), and hidden in 'teaser' mode (uses custom settings).
+    $this->assertNodeViewText($node, 'rss', $output['field_test_default'], t("The field is displayed as expected in view modes that use 'default' settings."));
+    $this->assertNodeViewNoText($node, 'teaser', $value, t("The field is hidden in view modes that use custom settings."));
+
+    // Change fomatter for 'default' mode, check that the field is displayed
+    // accordingly in 'rss' mode.
+    $edit = array(
+      'fields[field_test][type]' => 'field_test_with_prepare_view',
+    );
+    $this->drupalPost('admin/structure/types/manage/' . $this->hyphen_type . '/display', $edit, t('Save'));
+    $this->assertNodeViewText($node, 'rss', $output['field_test_with_prepare_view'], t("The field is displayed as expected in view modes that use 'default' settings."));
+
+    // Specialize the 'rss' mode, check that the field is displayed the same.
+    $edit = array(
+      "view_modes_custom[rss]" => TRUE,
+    );
+    $this->drupalPost('admin/structure/types/manage/' . $this->hyphen_type . '/display', $edit, t('Save'));
+    $this->assertNodeViewText($node, 'rss', $output['field_test_with_prepare_view'], t("The field is displayed as expected in newly specialized 'rss' mode."));
+
+    // Set the field to 'hidden' in the view mode, check that the field is
+    // hidden.
+    $edit = array(
+      'fields[field_test][type]' => 'hidden',
+    );
+    $this->drupalPost('admin/structure/types/manage/' . $this->hyphen_type . '/display/rss', $edit, t('Save'));
+    $this->assertNodeViewNoText($node, 'rss', $value, t("The field is hidden in 'rss' mode."));
+
+    // Set the view mode back to 'default', check that the field is displayed
+    // accordingly.
+    $edit = array(
+      "view_modes_custom[rss]" => FALSE,
+    );
+    $this->drupalPost('admin/structure/types/manage/' . $this->hyphen_type . '/display', $edit, t('Save'));
+    $this->assertNodeViewText($node, 'rss', $output['field_test_with_prepare_view'], t("The field is displayed as expected when 'rss' mode is set back to 'default' settings."));
+
+    // Specialize the view mode again.
+    $edit = array(
+      "view_modes_custom[rss]" => TRUE,
+    );
+    $this->drupalPost('admin/structure/types/manage/' . $this->hyphen_type . '/display', $edit, t('Save'));
+    // Check that the previous settings for the view mode have been kept.
+    $this->assertNodeViewNoText($node, 'rss', $value, t("The previous settings are kept when 'rss' mode is specialized again."));
+  }
+
+  /**
+   * Pass if the text is found in the rendered node in a given view mode.
+   *
+   * @param $node
+   *   The node.
+   * @param $view_mode
+   *   The view mode in which the node should be displayed.
+   * @param $text
+   *   Plain text to look for.
+   * @param $message
+   *   Message to display.
+   *
+   * @return
+   *   TRUE on pass, FALSE on fail.
+   */
+  function assertNodeViewText($node, $view_mode, $text, $message) {
+    return $this->assertNodeViewTextHelper($node, $view_mode, $text, $message, FALSE);
+  }
+
+  /**
+   * Pass if the text is node found in the rendered node in a given view mode.
+   *
+   * @param $node
+   *   The node.
+   * @param $view_mode
+   *   The view mode in which the node should be displayed.
+   * @param $text
+   *   Plain text to look for.
+   * @param $message
+   *   Message to display.
+   * @return
+   *   TRUE on pass, FALSE on fail.
+   */
+  function assertNodeViewNoText($node, $view_mode, $text, $message) {
+    return $this->assertNodeViewTextHelper($node, $view_mode, $text, $message, TRUE);
+  }
+
+  /**
+   * Helper for assertNodeViewText and assertNodeViewNoText.
+   *
+   * @param $node
+   *   The node.
+   * @param $view_mode
+   *   The view mode in which the node should be displayed.
+   * @param $text
+   *   Plain text to look for.
+   * @param $message
+   *   Message to display.
+   * @param $not_exists
+   *   TRUE if this text should not exist, FALSE if it should.
+   *
+   * @return
+   *   TRUE on pass, FALSE on fail.
+   */
+  function assertNodeViewTextHelper($node, $view_mode, $text, $message, $not_exists) {
+    // Make sure caches on the tester side are refreshed after changes
+    // submitted on the tested side.
+    field_info_cache_clear();
+
+    // Save current content so that we can restore it when we're done.
+    $old_content = $this->drupalGetContent();
+
+    // Render a cloned node, so that we do not alter the original.
+    $clone = clone $node;
+    $output = drupal_render(node_view($clone, $view_mode));
+    $this->verbose(t('Rendered node - view mode: @view_mode', array('@view_mode' => $view_mode)) . '<hr />'. $output);
+
+    // Assign content so that DrupalWebTestCase functions can be used.
+    $this->drupalSetContent($output);
+    $method = ($not_exists ? 'assertNoText' : 'assertText');
+    $return = $this->{$method}((string) $text, $message);
+
+    // Restore previous content.
+    $this->drupalSetContent($old_content);
+
+    return $return;
+  }
 }