diff --git a/README.md b/README.md
index 1856ae7..1509317 100644
--- a/README.md
+++ b/README.md
@@ -52,7 +52,7 @@ $root((dispose) => {
   // Wait a tick so update is applied and effect is run.
   await $tick();
 
-  $b.update((prev) => prev + 5); // logs `15` inside effect
+  $b.next((prev) => prev + 5); // logs `15` inside effect
 
   // Wait a tick so effect runs last update.
   await $tick();
@@ -143,7 +143,7 @@ console.log(result); // logs `10`
 ### `$observable`
 
 Wraps the given value into an observable function. The observable function will return the
-current value when invoked `fn()`, and provide a simple write API via `set()` and `update()`. The
+current value when invoked `fn()`, and provide a simple write API via `set()` and `next()`. The
 value can now be observed when used inside other computations created with [`$computed`](#computed)
 and [`$effect`](#effect).
 
@@ -154,7 +154,7 @@ const $a = $observable(10);
 
 $a(); // read
 $a.set(20); // write (1)
-$a.update((prev) => prev + 10); // write (2)
+$a.next((prev) => prev + 10); // write (2)
 ```
 
 > **Warning**
@@ -247,7 +247,7 @@ $computed(() => {
 ### `$readonly`
 
 Takes in the given observable and makes it read only by removing access to write
-operations (i.e., `set()` and `update()`).
+operations (i.e., `set()` and `next()`).
 
 ```js
 import { $observable, $readonly } from '@maverick-js/observables';
diff --git a/src/observables.ts b/src/observables.ts
index 81b2c20..4963db0 100644
--- a/src/observables.ts
+++ b/src/observables.ts
@@ -4,7 +4,7 @@ export type Observable<T> = {
   $id?: string;
   (): T;
   set: (nextValue: T) => void;
-  update: (next: (prevValue: T) => T) => void;
+  next: (next: (prevValue: T) => T) => void;
 };
 
 export type Computation<T> = {
@@ -84,7 +84,7 @@ export function $peek<T>(fn: () => T): T {
 
 /**
  * Wraps the given value into an observable function. The observable function will return the
- * current value when invoked `fn()`, and provide a simple write API via `set()` and `update()`. The
+ * current value when invoked `fn()`, and provide a simple write API via `set()` and `next()`. The
  * value can now be observed when used inside other computations created with `$computed` and `$effect`.
  *
  * @example
@@ -93,7 +93,7 @@ export function $peek<T>(fn: () => T): T {
  *
  * $a(); // read
  * $a.set(20); // write (1)
- * $a.update(prev => prev + 10); // write (2)
+ * $a.next(prev => prev + 10); // write (2)
  * ```
  */
 export function $observable<T>(initialValue: T, $id?: string): Observable<T> {
@@ -117,7 +117,7 @@ export function $observable<T>(initialValue: T, $id?: string): Observable<T> {
     }
   };
 
-  $observable.update = (next: (prevValue: T) => T) => {
+  $observable.next = (next: (prevValue: T) => T) => {
     $observable.set(next(currentValue));
   };
 
@@ -251,7 +251,7 @@ export function $effect(fn: () => void, $id?: string): StopEffect {
 
 /**
  * Takes in the given observable and makes it read only by removing access to write
- * operations (i.e., `set()` and `update()`).
+ * operations (i.e., `set()` and `next()`).
  *
  * @example
  * ```js
diff --git a/tests/observables.test.ts b/tests/observables.test.ts
index 93c1275..ba016e7 100644
--- a/tests/observables.test.ts
+++ b/tests/observables.test.ts
@@ -68,9 +68,9 @@ describe('$observable', () => {
     expect($a()).toEqual(20);
   });
 
-  it('should update observable via `update()`', () => {
+  it('should update observable via `next()`', () => {
     const $a = $observable(10);
-    $a.update((n) => n + 10);
+    $a.next((n) => n + 10);
     expect($a()).toEqual(20);
   });
 });
@@ -385,7 +385,7 @@ describe('$readonly', () => {
 
     expect(() => {
       // @ts-expect-error
-      $b.update((n) => n + 10);
+      $b.next((n) => n + 10);
     }).toThrow();
 
     await $tick();