diff --git a/jupyter_ydoc/ynotebook.py b/jupyter_ydoc/ynotebook.py
index 9067740..b6886a7 100644
--- a/jupyter_ydoc/ynotebook.py
+++ b/jupyter_ydoc/ynotebook.py
@@ -17,6 +17,8 @@
 # The default minor version of the notebook format.
 NBFORMAT_MINOR_VERSION = 5
 
+_CELL_KEY_TYPE_MAP = {"metadata": Map, "source": Text, "outputs": Array}
+
 
 class YNotebook(YBaseDoc):
     """
@@ -249,7 +251,7 @@ def set(self, value: dict) -> None:
                 "id": str(uuid4()),
             }
         ]
-        old_ycells_by_id = {ycell["id"]: ycell for ycell in self._ycells}
+        old_ycells_by_id: dict[str, Map] = {ycell["id"]: ycell for ycell in self._ycells}
 
         with self._ydoc.transaction():
             new_cell_list: list[dict] = []
@@ -260,7 +262,11 @@ def set(self, value: dict) -> None:
                 cell_id = new_cell.get("id")
                 if cell_id and (old_ycell := old_ycells_by_id.get(cell_id)):
                     old_cell = self._cell_to_py(old_ycell)
-                    if old_cell == new_cell:
+                    updated_granularly = self._update_cell(
+                        old_cell=old_cell, new_cell=new_cell, old_ycell=old_ycell
+                    )
+
+                    if updated_granularly:
                         new_cell_list.append(old_cell)
                         retained_cells.add(cell_id)
                         continue
@@ -324,3 +330,57 @@ def observe(self, callback: Callable[[str, Any], None]) -> None:
         self._subscriptions[self._ystate] = self._ystate.observe(partial(callback, "state"))
         self._subscriptions[self._ymeta] = self._ymeta.observe_deep(partial(callback, "meta"))
         self._subscriptions[self._ycells] = self._ycells.observe_deep(partial(callback, "cells"))
+
+    def _update_cell(self, old_cell: dict, new_cell: dict, old_ycell: Map) -> bool:
+        if old_cell == new_cell:
+            return True
+        # attempt to update cell granularly
+        old_keys = set(old_cell.keys())
+        new_keys = set(new_cell.keys())
+
+        shared_keys = old_keys & new_keys
+        removed_keys = old_keys - new_keys
+        added_keys = new_keys - old_keys
+
+        for key in shared_keys:
+            if old_cell[key] != new_cell[key]:
+                value = new_cell[key]
+                if key == "output" and value:
+                    # outputs require complex handling - some have Text type nested;
+                    # for now skip creating them; clearing all outputs is fine
+                    return False
+
+                if key in _CELL_KEY_TYPE_MAP:
+                    kind = _CELL_KEY_TYPE_MAP[key]
+
+                    if not isinstance(old_ycell[key], kind):
+                        # if our assumptions about types do not hold, fall back to hard update
+                        return False
+
+                    if kind == Text:
+                        old: Text = old_ycell[key]
+                        old.clear()
+                        old += value
+                    elif kind == Array:
+                        old: Array = old_ycell[key]
+                        old.clear()
+                        old.extend(value)
+                    elif kind == Map:
+                        old: Map = old_ycell[key]
+                        old.clear()
+                        old.update(value)
+                else:
+                    old_ycell[key] = new_cell[key]
+
+        for key in removed_keys:
+            del old_ycell[key]
+
+        for key in added_keys:
+            if key in _CELL_KEY_TYPE_MAP:
+                # we hard-reload cells when keys that require nested types get added
+                # to allow the frontend to connect observers; this could be changed
+                # in the future, once frontends learn how to observe all changes
+                return False
+            else:
+                old_ycell[key] = new_cell[key]
+        return True
diff --git a/tests/test_ynotebook.py b/tests/test_ynotebook.py
index f7619a1..868e9c1 100644
--- a/tests/test_ynotebook.py
+++ b/tests/test_ynotebook.py
@@ -1,7 +1,9 @@
 # Copyright (c) Jupyter Development Team.
 # Distributed under the terms of the Modified BSD License.
 
-from pycrdt import Map
+
+from pycrdt import ArrayEvent, Map, MapEvent, TextEvent
+from pytest import mark
 
 from jupyter_ydoc import YNotebook
 
@@ -114,3 +116,66 @@ def record_changes(topic, event):
         {"delete": 1},
         {"insert": [AnyInstanceOf(Map)]},
     ]
+
+
+@mark.parametrize(
+    "modifications, expected_events",
+    [
+        # modifications of single attributes
+        ([["source", "'b'"]], {TextEvent}),
+        ([["outputs", []]], {ArrayEvent}),
+        ([["execution_count", 2]], {MapEvent}),
+        ([["metadata", {"tags": []}]], {MapEvent}),
+        ([["new_key", "test"]], {MapEvent}),
+        # multi-attribute modifications
+        ([["source", "10"], ["execution_count", 10]], {TextEvent, MapEvent}),
+    ],
+)
+def test_modify_single_cell(modifications, expected_events):
+    nb = YNotebook()
+    nb.set(
+        {
+            "cells": [
+                {
+                    "id": "8800f7d8-6cad-42ef-a339-a9c185ffdd54",
+                    "cell_type": "code",
+                    "source": "'a'",
+                    "metadata": {"tags": ["test-tag"]},
+                    "outputs": [{"name": "stdout", "output_type": "stream", "text": ["a\n"]}],
+                    "execution_count": 1,
+                },
+            ]
+        }
+    )
+
+    # Get the model as Python object
+    model = nb.get()
+
+    # Make changes
+    for modification in modifications:
+        key, new_value = modification
+        model["cells"][0][key] = new_value
+
+    changes = []
+
+    def record_changes(topic, event):
+        changes.append((topic, event))
+
+    nb.observe(record_changes)
+    nb.set(model)
+
+    for modification in modifications:
+        key, new_value = modification
+        after = nb.ycells[0][key]
+        after_py = after.to_py() if hasattr(after, "to_py") else after
+        assert after_py == new_value
+
+    # there should be only one change
+    assert len(changes) == 1
+    cell_events = [e for t, e in changes if t == "cells"]
+    # and it should be a cell change
+    assert len(cell_events) == 1
+    # but it should be a change to cell data, not a change to the cell list
+    events = cell_events[0]
+    assert len(events) == len(expected_events)
+    assert {type(e) for e in events} == expected_events