diff --git a/jest.config.js b/jest.config.js
index 6b3958da..39af7057 100644
--- a/jest.config.js
+++ b/jest.config.js
@@ -3,6 +3,7 @@ module.exports = {
   transform: {
     "^.+\\.ts?$": "ts-jest"
   },
+  verbose: false,
   testRegex: "(/tests/.*(test|spec))\\.ts?$",
   moduleFileExtensions: ["ts", "tsx", "js", "jsx", "json", "node"]
 };
diff --git a/src/component.ts b/src/component.ts
index ccffa84c..11d1cc40 100644
--- a/src/component.ts
+++ b/src/component.ts
@@ -5,6 +5,7 @@ import sdListeners from "../libs/snabbdom/src/modules/eventlisteners";
 import { init } from "../libs/snabbdom/src/snabbdom";
 import { VNode } from "../libs/snabbdom/src/vnode";
 import { EventBus } from "./event_bus";
+import { Observer } from "./observer";
 import { QWeb } from "./qweb";
 import { idGenerator } from "./utils";
 
@@ -34,6 +35,7 @@ export interface Meta<T extends Env, Props> {
   renderProps: Props | null;
   renderPromise: Promise<VNode> | null;
   boundHandlers: { [key: number]: any };
+  observer: Observer;
 }
 
 const patch = init([sdListeners, sdAttrs, sdProps]);
@@ -118,7 +120,8 @@ export class Component<
       renderId: 1,
       renderPromise: null,
       renderProps: props || null,
-      boundHandlers: {}
+      boundHandlers: {},
+      observer: new Observer()
     };
   }
 
@@ -232,6 +235,7 @@ export class Component<
       this._visitSubTree(w => {
         if (!w.__owl__.isMounted && this.el!.contains(w.el)) {
           w.__owl__.isMounted = true;
+          this._observeState();
           w.mounted();
           return true;
         }
@@ -312,7 +316,6 @@ export class Component<
     if (this.__owl__.isMounted) {
       await this.render(true);
     }
-    this.patched();
   }
 
   async updateProps(
@@ -340,7 +343,6 @@ export class Component<
     if (this.__owl__.isStarted) {
       await this.render();
     }
-    this.patched();
   }
 
   //--------------------------------------------------------------------------
@@ -351,7 +353,6 @@ export class Component<
     await this.willUpdateProps(nextProps);
     this.props = nextProps;
     await this.render();
-    this.patched();
   }
 
   _patch(vnode) {
@@ -359,6 +360,7 @@ export class Component<
     if (this.__owl__.vnode) {
       this.willPatch();
       this.__owl__.vnode = patch(this.__owl__.vnode, vnode);
+      this.patched();
     } else {
       this.__owl__.vnode = patch(document.createElement(vnode.sel!), vnode);
     }
@@ -419,6 +421,7 @@ export class Component<
     if (this.__owl__.parent) {
       if (this.__owl__.parent!.__owl__.isMounted) {
         this.__owl__.isMounted = true;
+        this._observeState();
         this.mounted();
         const children = this.__owl__.children;
         for (let id in children) {
@@ -437,4 +440,13 @@ export class Component<
       }
     }
   }
+
+  _observeState() {
+    if (Object.keys(this.state).length) {
+      this.__owl__.observer.observe(this.state);
+      this.__owl__.observer.notifyCB = () => {
+        this.render();
+      };
+    }
+  }
 }
diff --git a/tests/component.test.ts b/tests/component.test.ts
index 5b50204e..4174d46b 100644
--- a/tests/component.test.ts
+++ b/tests/component.test.ts
@@ -259,7 +259,8 @@ describe("lifecycle hooks", () => {
     const widget = new ParentWidget(env);
     await widget.mount(fixture);
     expect(hookCounter).toBe(0); // sub widget not created yet
-    await widget.updateState({ ok: true });
+    widget.state.ok = true;
+    await nextTick();
     expect(hookCounter).toBe(2);
   });
 
@@ -566,7 +567,8 @@ describe("lifecycle hooks", () => {
     const widget = new ParentWidget(env);
     await widget.mount(fixture);
     expect(steps).toEqual([]);
-    await widget.updateState({ n: 2 });
+    widget.state.n = 2;
+    await nextTick();
 
     // Not sure about this order.  If you disagree, feel free to open an issue...
     expect(steps).toEqual([
@@ -1181,10 +1183,12 @@ describe("async rendering", () => {
     const w = new W(env);
     await w.mount(fixture);
     expect(n).toBe(0);
-    w.updateState({ val: 2 });
+    w.state.val = 2;
+
+    await nextMicroTick();
     expect(n).toBe(1);
-    await nextTick();
-    w.updateState({ val: 3 });
+    w.state.val = 3;
+    await nextMicroTick();
     expect(n).toBe(2);
     def.resolve();
     await nextTick();
@@ -1391,3 +1395,22 @@ describe("updating environment", () => {
     expect(fixture.innerHTML).toBe("<div><div>rerendered</div></div>");
   });
 });
+
+describe("widget and observable state", () => {
+  test("widget is rerendered when its state is changed", async () => {
+    class TestWidget extends Widget {
+      state = { drink: "water" };
+      inlineTemplate = `<div><t t-esc="state.drink"/></div>`;
+    }
+    const widget = new TestWidget(env);
+    await widget.mount(fixture);
+
+    expect(fixture.innerHTML).toBe("<div>water</div>");
+    widget.state.drink = "beer";
+
+    // 2 microtask ticks: one for observer, one for rendering
+    await nextMicroTick();
+    await nextMicroTick();
+    expect(fixture.innerHTML).toBe("<div>beer</div>");
+  });
+});