diff --git a/tests/bug01262.phpt b/tests/bug01262.phpt
new file mode 100644
index 000000000..dc45b0f79
--- /dev/null
+++ b/tests/bug01262.phpt
@@ -0,0 +1,16 @@
+--TEST--
+Test for bug #1262: overload_var_dump=0 messes with xdebug_var_dump()
+--INI--
+xdebug.default_enable = 1
+xdebug.overload_var_dump = 0
+html_errors = 1
+--FILE--
+<?php
+xdebug_var_dump("Anything");
+echo "\n";
+var_dump("Anything");
+?>
+--EXPECT--
+<pre class='xdebug-var-dump' dir='ltr'><small>string</small> <font color='#cc0000'>'Anything'</font> <i>(length=8)</i>
+</pre>
+string(8) "Anything"
diff --git a/xdebug.c b/xdebug.c
index d02f8e17b..9612e9f9c 100644
--- a/xdebug.c
+++ b/xdebug.c
@@ -2190,8 +2190,18 @@ PHP_FUNCTION(xdebug_var_dump)
 	int     argc;
 	int     i, len;
 	char   *val;
-	
-	if (!XG(overload_var_dump)) {
+
+	/* Ignore our new shiny function if overload_var_dump is set to 0 *and* the
+	 * function is not being called as xdebug_var_dump() (usually, that'd be
+	 * the overloaded var_dump() of course). Fixes issue 1262. */
+	if (
+		!XG(overload_var_dump)
+#if PHP_VERSION_ID >= 70000
+		&& (strcmp("xdebug_var_dump", execute_data->func->common.function_name->val) != 0)
+#else
+		&& (strcmp("xdebug_var_dump", EG(current_execute_data)->function_state.function->common.function_name) != 0)
+#endif
+	) {
 		XG(orig_var_dump_func)(INTERNAL_FUNCTION_PARAM_PASSTHRU);
 		return;
 	}