diff --git a/docs/reference/pip_install.rst b/docs/reference/pip_install.rst
index 7eb37e6a7..319af1e0c 100644
--- a/docs/reference/pip_install.rst
+++ b/docs/reference/pip_install.rst
@@ -18,6 +18,24 @@ Description
 
 .. _`Requirements File Format`:
 
+Installation Order
+++++++++++++++++++
+
+Pip installs dependencies before the things that depend on them. In the event
+of a dependency cycle, the first encountered member of the cycle is installed
+last.
+
+For instance, if quux depends on foo which depends on bar which depends on baz,
+which depends on foo::
+
+    pip install quux
+    ...
+    Installing collected packages baz, bar, foo, quux
+
+    pip install bar
+    ...
+    Installing collected packages foo, baz, bar
+
 Requirements File Format
 ++++++++++++++++++++++++
 
diff --git a/pip/req/req_install.py b/pip/req/req_install.py
index 393cb1526..22c12716a 100644
--- a/pip/req/req_install.py
+++ b/pip/req/req_install.py
@@ -318,6 +318,7 @@ class InstallRequirement(object):
 
     @property
     def setup_py(self):
+        assert self.source_dir, "No source dir for %s" % self
         try:
             import setuptools  # noqa
         except ImportError:
diff --git a/pip/req/req_set.py b/pip/req/req_set.py
index 8aee642b8..2499ddf59 100644
--- a/pip/req/req_set.py
+++ b/pip/req/req_set.py
@@ -1,5 +1,6 @@
 from __future__ import absolute_import
 
+from collections import defaultdict
 import functools
 import itertools
 import logging
@@ -170,6 +171,8 @@ class RequirementSet(object):
         if wheel_download_dir:
             wheel_download_dir = normalize_path(wheel_download_dir)
         self.wheel_download_dir = wheel_download_dir
+        # Maps from install_req -> dependencies_of_install_req
+        self._dependencies = defaultdict(list)
 
     def __str__(self):
         reqs = [req for req in self.requirements.values()
@@ -184,13 +187,27 @@ class RequirementSet(object):
         return ('<%s object; %d requirement(s): %s>'
                 % (self.__class__.__name__, len(reqs), reqs_str))
 
-    def add_requirement(self, install_req):
-        if not install_req.match_markers():
+    def add_requirement(self, install_req, parent_req_name=None):
+        """Add install_req as a requirement to install.
+
+        :param parent_req_name: The name of the requirement that needed this
+            added. The name is used because when multiple unnamed requirements
+            resolve to the same name, we could otherwise end up with dependency
+            links that point outside the Requirements set. parent_req must
+            already be added. Note that None implies that this is a user
+            supplied requirement, vs an inferred one.
+        :return: Additional requirements to scan. That is either [] if
+            the requirement is not applicable, or [install_req] if the
+            requirement is applicable and has just been added.
+        """
+        name = install_req.name
+        if ((not name or not self.has_requirement(name)) and not
+                install_req.match_markers()):
+            # Only log if we haven't already got install_req from somewhere.
             logger.debug("Ignore %s: markers %r don't match",
                          install_req.name, install_req.markers)
-            return
+            return []
 
-        name = install_req.name
         install_req.as_egg = self.as_egg
         install_req.use_user_site = self.use_user_site
         install_req.target_dir = self.target_dir
@@ -198,15 +215,28 @@ class RequirementSet(object):
         if not name:
             # url or path requirement w/o an egg fragment
             self.unnamed_requirements.append(install_req)
+            return [install_req]
         else:
-            if self.has_requirement(name):
+            if parent_req_name is None and self.has_requirement(name):
                 raise InstallationError(
                     'Double requirement given: %s (already in %s, name=%r)'
                     % (install_req, self.get_requirement(name), name))
-            self.requirements[name] = install_req
-            # FIXME: what about other normalizations?  E.g., _ vs. -?
-            if name.lower() != name:
-                self.requirement_aliases[name.lower()] = name
+            if not self.has_requirement(name):
+                # Add requirement
+                self.requirements[name] = install_req
+                # FIXME: what about other normalizations?  E.g., _ vs. -?
+                if name.lower() != name:
+                    self.requirement_aliases[name.lower()] = name
+                result = [install_req]
+            else:
+                # Canonicalise to the already-added object
+                install_req = self.get_requirement(name)
+                # No need to scan, this is a duplicate requirement.
+                result = []
+            if parent_req_name:
+                parent_req = self.get_requirement(parent_req_name)
+                self._dependencies[parent_req].append(install_req)
+            return result
 
     def has_requirement(self, project_name):
         for name in project_name, project_name.lower():
@@ -507,22 +537,19 @@ class RequirementSet(object):
             more_reqs = []
 
             def add_req(subreq):
-                if self.has_requirement(subreq.project_name):
-                    # FIXME: check for conflict
-                    return
-                subreq = InstallRequirement(
+                sub_install_req = InstallRequirement(
                     str(subreq),
                     req_to_install,
                     isolated=self.isolated,
                 )
-                more_reqs.append(subreq)
-                self.add_requirement(subreq)
+                more_reqs.extend(self.add_requirement(
+                    sub_install_req, req_to_install.name))
 
             # We add req_to_install before its dependencies, so that we
             # can refer to it when adding dependencies.
             if not self.has_requirement(req_to_install.name):
                 # 'unnamed' requirements will get added here
-                self.add_requirement(req_to_install)
+                self.add_requirement(req_to_install, None)
 
             if not self.ignore_dependencies:
                 if (req_to_install.extras):
@@ -575,13 +602,36 @@ class RequirementSet(object):
             )
         )
 
+    def _to_install(self):
+        """Create the installation order.
+
+        The installation order is topological - requirements are installed
+        before the requiring thing. We break cycles at an arbitrary point,
+        and make no other guarantees.
+        """
+        # The current implementation, which we may change at any point
+        # installs the user specified things in the order given, except when
+        # dependencies require putting other things first.
+        order = []
+        ordered_reqs = set()
+
+        def schedule(req):
+            if req.satisfied_by or req in ordered_reqs:
+                return
+            ordered_reqs.add(req)
+            for dep in self._dependencies[req]:
+                schedule(dep)
+            order.append(req)
+        for install_req in self.requirements.values():
+            schedule(install_req)
+        return order
+
     def install(self, install_options, global_options=(), *args, **kwargs):
         """
         Install everything in this set (after having downloaded and unpacked
         the packages)
         """
-        to_install = [r for r in self.requirements.values()[::-1]
-                      if not r.satisfied_by]
+        to_install = self._to_install()
 
         # DISTRIBUTE TO SETUPTOOLS UPGRADE HACK (1 of 3 parts)
         # move the distribute-0.7.X wrapper to the end because it does not
diff --git a/tests/data/packages/README.txt b/tests/data/packages/README.txt
index 70f1eb088..9e89e9114 100644
--- a/tests/data/packages/README.txt
+++ b/tests/data/packages/README.txt
@@ -71,6 +71,18 @@ priority-*
 ----------
 used for testing wheel priority over sdists
 
+TopoRequires[123][-0.0.1.tar.gz]
+--------------------------------
+
+These are used for testing topological handling of requirements: we have
+TopoRequires, which is install-required by TopoRequires2 and TopoRequires3
+and finally TopoRequires4 which install-requires both TopoRequires2 and 3
+and also install-Requires TopoRequires.
+This creates a diamond where no matter which way we walk without topological
+awareness we'll end up attempting to install TopoRequires after one of
+TopoRequires2, TopoRequires3 or TopoRequires4. (prefix iteration works as its
+topological, suffix iteration likewise, infix breaks).
+
 simple[2]-[123].0.tar.gz
 ------------------------
 contains "simple[2]" package; good for basic testing and version logic.
diff --git a/tests/data/packages/TopoRequires-0.0.1.tar.gz b/tests/data/packages/TopoRequires-0.0.1.tar.gz
new file mode 100644
index 000000000..58182befe
Binary files /dev/null and b/tests/data/packages/TopoRequires-0.0.1.tar.gz differ
diff --git a/tests/data/packages/TopoRequires/setup.py b/tests/data/packages/TopoRequires/setup.py
new file mode 100644
index 000000000..6cd29a7b6
--- /dev/null
+++ b/tests/data/packages/TopoRequires/setup.py
@@ -0,0 +1,7 @@
+from setuptools import setup
+
+setup(
+    name='TopoRequires',
+    version='0.0.1',
+    packages=['toporequires'],
+)
diff --git a/tests/data/packages/TopoRequires/toporequires/__init__.py b/tests/data/packages/TopoRequires/toporequires/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/data/packages/TopoRequires2-0.0.1.tar.gz b/tests/data/packages/TopoRequires2-0.0.1.tar.gz
new file mode 100644
index 000000000..1712f5ba1
Binary files /dev/null and b/tests/data/packages/TopoRequires2-0.0.1.tar.gz differ
diff --git a/tests/data/packages/TopoRequires2/setup.cfg.pending b/tests/data/packages/TopoRequires2/setup.cfg.pending
new file mode 100644
index 000000000..d42f01a53
--- /dev/null
+++ b/tests/data/packages/TopoRequires2/setup.cfg.pending
@@ -0,0 +1,4 @@
+[metadata]
+name = TopoRequires2
+install-requires =
+  TopoRequires
diff --git a/tests/data/packages/TopoRequires2/setup.py b/tests/data/packages/TopoRequires2/setup.py
new file mode 100644
index 000000000..019f43cb2
--- /dev/null
+++ b/tests/data/packages/TopoRequires2/setup.py
@@ -0,0 +1,8 @@
+from setuptools import setup
+
+setup(
+    name='TopoRequires2',
+    version='0.0.1',
+    packages=['toporequires2'],
+    install_requires=['TopoRequires'],
+)
diff --git a/tests/data/packages/TopoRequires2/toporequires2/__init__.py b/tests/data/packages/TopoRequires2/toporequires2/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/data/packages/TopoRequires3-0.0.1.tar.gz b/tests/data/packages/TopoRequires3-0.0.1.tar.gz
new file mode 100644
index 000000000..165ad757f
Binary files /dev/null and b/tests/data/packages/TopoRequires3-0.0.1.tar.gz differ
diff --git a/tests/data/packages/TopoRequires3/setup.cfg.pending b/tests/data/packages/TopoRequires3/setup.cfg.pending
new file mode 100644
index 000000000..cdd67122b
--- /dev/null
+++ b/tests/data/packages/TopoRequires3/setup.cfg.pending
@@ -0,0 +1,4 @@
+[metadata]
+name = TopoRequires3
+install-requires =
+  TopoRequires
diff --git a/tests/data/packages/TopoRequires3/setup.py b/tests/data/packages/TopoRequires3/setup.py
new file mode 100644
index 000000000..772ed618e
--- /dev/null
+++ b/tests/data/packages/TopoRequires3/setup.py
@@ -0,0 +1,8 @@
+from setuptools import setup
+
+setup(
+    name='TopoRequires3',
+    version='0.0.1',
+    packages=['toporequires3'],
+    install_requires=['TopoRequires'],
+)
diff --git a/tests/data/packages/TopoRequires3/toporequires3/__init__.py b/tests/data/packages/TopoRequires3/toporequires3/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/data/packages/TopoRequires4/setup.cfg.pending b/tests/data/packages/TopoRequires4/setup.cfg.pending
new file mode 100644
index 000000000..2fc2c551f
--- /dev/null
+++ b/tests/data/packages/TopoRequires4/setup.cfg.pending
@@ -0,0 +1,6 @@
+[metadata]
+name = TopoRequires4
+install-requires =
+  TopoRequires2
+  TopoRequires
+  TopoRequires3
diff --git a/tests/data/packages/TopoRequires4/setup.py b/tests/data/packages/TopoRequires4/setup.py
new file mode 100644
index 000000000..e276f55a2
--- /dev/null
+++ b/tests/data/packages/TopoRequires4/setup.py
@@ -0,0 +1,8 @@
+from setuptools import setup
+
+setup(
+    name='TopoRequires4',
+    version='0.0.1',
+    packages=['toporequires4'],
+    install_requires=['TopoRequires2', 'TopoRequires', 'TopoRequires3'],
+)
diff --git a/tests/data/packages/TopoRequires4/toporequires4/__init__.py b/tests/data/packages/TopoRequires4/toporequires4/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/functional/test_install.py b/tests/functional/test_install.py
index 426523589..f39051455 100644
--- a/tests/functional/test_install.py
+++ b/tests/functional/test_install.py
@@ -732,3 +732,12 @@ def test_install_upgrade_editable_depending_on_other_editable(script):
     script.pip('install', '--upgrade', '--editable', pkgb_path)
     result = script.pip('list')
     assert "pkgb" in result.stdout
+
+
+def test_install_topological_sort(script, data):
+    to_install = data.packages.join('TopoRequires4')
+    args = ['install'] + [to_install, '-f', data.packages]
+    res = str(script.pip(*args, expect_error=False))
+    order1 = 'TopoRequires, TopoRequires2, TopoRequires3, TopoRequires4'
+    order2 = 'TopoRequires, TopoRequires3, TopoRequires2, TopoRequires4'
+    assert order1 in res or order2 in res, res