diff --git a/lib/mixins/property-effects.html b/lib/mixins/property-effects.html
index 2321826b7e..6aca39fe9a 100644
--- a/lib/mixins/property-effects.html
+++ b/lib/mixins/property-effects.html
@@ -185,12 +185,12 @@
    * @private
    */
   function runObserverEffect(inst, property, props, oldProps, info) {
-    let fn = inst[info.methodName];
+    let fn = typeof info.method === 'function' ? info.method : inst[info.method];
     let changedProp = info.property;
     if (fn) {
       fn.call(inst, inst.__data[changedProp], oldProps[changedProp]);
     } else {
-      console.warn('observer method `' + info.methodName + '` not defined');
+      console.warn('observer method `' + info.method + '` not defined');
     }
   }
 
@@ -1899,19 +1899,19 @@
        * Creates a single-property observer for the given property.
        *
        * @param {string} property Property name
-       * @param {string} methodName Name of observer method to call
+       * @param {string|function(*,*)} method Name or function reference of observer method to call
        * @param {boolean=} dynamicFn Whether the method name should be included as
        *   a dependency to the effect.
        * @protected
        */
-      _createPropertyObserver(property, methodName, dynamicFn) {
-        let info = { property, methodName };
+      _createPropertyObserver(property, method, dynamicFn) {
+        let info = { property, method };
         this._addPropertyEffect(property, TYPES.OBSERVE, {
           fn: runObserverEffect, info, trigger: {name: property}
         });
         if (dynamicFn) {
-          this._addPropertyEffect(methodName, TYPES.OBSERVE, {
-            fn: runObserverEffect, info, trigger: {name: methodName}
+          this._addPropertyEffect(method, TYPES.OBSERVE, {
+            fn: runObserverEffect, info, trigger: {name: method}
           });
         }
       }
diff --git a/test/unit/property-effects-elements.html b/test/unit/property-effects-elements.html
index 7005ec55b3..6b1e0d4c19 100644
--- a/test/unit/property-effects-elements.html
+++ b/test/unit/property-effects-elements.html
@@ -433,6 +433,7 @@
 </script>
 
 <script>
+  var prop2Changed = sinon.spy();
   Polymer({
     is: 'x-prop',
     properties: {
@@ -442,12 +443,13 @@
       },
       prop2: {
         value: 'default',
-        observer: 'prop2Changed'
+        observer: prop2Changed
       }
     },
     created: function() {
       this.prop1Changed = sinon.spy();
-      this.prop2Changed = sinon.spy();
+      this.prop2Changed = prop2Changed;
+      prop2Changed.reset();
     }
   });
 </script>