diff --git a/Cargo.lock b/Cargo.lock
index d675f59d8d9..33e8ef7d7c8 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -810,6 +810,7 @@ dependencies = [
  "rustup-dist 1.8.0",
  "rustup-mock 1.8.0",
  "rustup-utils 1.8.0",
+ "same-file 1.0.1 (registry+https://github.com/rust-lang/crates.io-index)",
  "scopeguard 0.3.3 (registry+https://github.com/rust-lang/crates.io-index)",
  "serde 1.0.23 (registry+https://github.com/rust-lang/crates.io-index)",
  "serde_derive 1.0.23 (registry+https://github.com/rust-lang/crates.io-index)",
@@ -917,6 +918,14 @@ dependencies = [
  "winapi 0.2.8 (registry+https://github.com/rust-lang/crates.io-index)",
 ]
 
+[[package]]
+name = "same-file"
+version = "1.0.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+dependencies = [
+ "winapi 0.3.3 (registry+https://github.com/rust-lang/crates.io-index)",
+]
+
 [[package]]
 name = "schannel"
 version = "0.1.9"
@@ -1394,11 +1403,30 @@ name = "winapi"
 version = "0.2.8"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 
+[[package]]
+name = "winapi"
+version = "0.3.3"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+dependencies = [
+ "winapi-i686-pc-windows-gnu 0.3.2 (registry+https://github.com/rust-lang/crates.io-index)",
+ "winapi-x86_64-pc-windows-gnu 0.3.2 (registry+https://github.com/rust-lang/crates.io-index)",
+]
+
 [[package]]
 name = "winapi-build"
 version = "0.1.1"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 
+[[package]]
+name = "winapi-i686-pc-windows-gnu"
+version = "0.3.2"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+
+[[package]]
+name = "winapi-x86_64-pc-windows-gnu"
+version = "0.3.2"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+
 [[package]]
 name = "winreg"
 version = "0.4.0"
@@ -1534,6 +1562,7 @@ dependencies = [
 "checksum rustc-serialize 0.3.24 (registry+https://github.com/rust-lang/crates.io-index)" = "dcf128d1287d2ea9d80910b5f1120d0b8eede3fbf1abe91c40d39ea7d51e6fda"
 "checksum safemem 0.2.0 (registry+https://github.com/rust-lang/crates.io-index)" = "e27a8b19b835f7aea908818e871f5cc3a5a186550c30773be987e155e8163d8f"
 "checksum same-file 0.1.3 (registry+https://github.com/rust-lang/crates.io-index)" = "d931a44fdaa43b8637009e7632a02adc4f2b2e0733c08caa4cf00e8da4a117a7"
+"checksum same-file 1.0.1 (registry+https://github.com/rust-lang/crates.io-index)" = "f3257af0472da4b8b8902102a57bafffd9991f0f43772a8af6153d597e6e4ae2"
 "checksum schannel 0.1.9 (registry+https://github.com/rust-lang/crates.io-index)" = "4330c2e874379fbd28fa67ba43239dbe8c7fb00662ceb1078bd37474f08bf5ce"
 "checksum scoped-tls 0.1.0 (registry+https://github.com/rust-lang/crates.io-index)" = "f417c22df063e9450888a7561788e9bd46d3bb3c1466435b4eccb903807f147d"
 "checksum scopeguard 0.3.3 (registry+https://github.com/rust-lang/crates.io-index)" = "94258f53601af11e6a49f722422f6e3425c52b06245a5cf9bc09908b174f5e27"
@@ -1592,7 +1621,10 @@ dependencies = [
 "checksum wait-timeout 0.1.5 (registry+https://github.com/rust-lang/crates.io-index)" = "b9f3bf741a801531993db6478b95682117471f76916f5e690dd8d45395b09349"
 "checksum walkdir 1.0.7 (registry+https://github.com/rust-lang/crates.io-index)" = "bb08f9e670fab86099470b97cd2b252d6527f0b3cc1401acdb595ffc9dd288ff"
 "checksum winapi 0.2.8 (registry+https://github.com/rust-lang/crates.io-index)" = "167dc9d6949a9b857f3451275e911c3f44255842c1f7a76f33c55103a909087a"
+"checksum winapi 0.3.3 (registry+https://github.com/rust-lang/crates.io-index)" = "b09fb3b6f248ea4cd42c9a65113a847d612e17505d6ebd1f7357ad68a8bf8693"
 "checksum winapi-build 0.1.1 (registry+https://github.com/rust-lang/crates.io-index)" = "2d315eee3b34aca4797b2da6b13ed88266e6d612562a0c46390af8299fc699bc"
+"checksum winapi-i686-pc-windows-gnu 0.3.2 (registry+https://github.com/rust-lang/crates.io-index)" = "ec6667f60c23eca65c561e63a13d81b44234c2e38a6b6c959025ee907ec614cc"
+"checksum winapi-x86_64-pc-windows-gnu 0.3.2 (registry+https://github.com/rust-lang/crates.io-index)" = "98f12c52b2630cd05d2c3ffd8e008f7f48252c042b4871c72aed9dc733b96668"
 "checksum winreg 0.4.0 (registry+https://github.com/rust-lang/crates.io-index)" = "cbf285379f20d7f26abd990d9a566be9d31ab7a9d335299baaa1f0604f5f96af"
 "checksum ws2_32-sys 0.2.1 (registry+https://github.com/rust-lang/crates.io-index)" = "d59cefebd0c892fa2dd6de581e937301d8552cb44489cdff035c6187cb63fa5e"
 "checksum xattr 0.1.11 (registry+https://github.com/rust-lang/crates.io-index)" = "5f04de8a1346489a2f9e9bd8526b73d135ec554227b17568456e86aa35b6f3fc"
diff --git a/Cargo.toml b/Cargo.toml
index f1fb8728d0f..5e3431511f1 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -42,6 +42,7 @@ markdown = "0.2"
 rand = "0.3.11"
 regex = "0.2"
 remove_dir_all = "0.2.0"
+same-file = "1.0"
 scopeguard = "0.3"
 serde = "1.0"
 serde_derive = "1.0"
diff --git a/src/rustup-cli/errors.rs b/src/rustup-cli/errors.rs
index 6d7a4e95928..f36486e5738 100644
--- a/src/rustup-cli/errors.rs
+++ b/src/rustup-cli/errors.rs
@@ -1,5 +1,6 @@
 #![allow(dead_code)]
 
+use std::io;
 use std::path::PathBuf;
 
 use rustup;
@@ -15,6 +16,7 @@ error_chain! {
 
     foreign_links {
         Temp(temp::Error);
+        Io(io::Error);
     }
 
     errors {
diff --git a/src/rustup-cli/main.rs b/src/rustup-cli/main.rs
index e0ebd709116..0140d086309 100644
--- a/src/rustup-cli/main.rs
+++ b/src/rustup-cli/main.rs
@@ -26,6 +26,7 @@ extern crate term;
 extern crate itertools;
 extern crate time;
 extern crate rand;
+extern crate same_file;
 extern crate scopeguard;
 extern crate tempdir;
 extern crate sha2;
diff --git a/src/rustup-cli/self_update.rs b/src/rustup-cli/self_update.rs
index 35f7904930c..42b24ef7bde 100644
--- a/src/rustup-cli/self_update.rs
+++ b/src/rustup-cli/self_update.rs
@@ -34,6 +34,7 @@ use common::{self, Confirm};
 use errors::*;
 use rustup_dist::dist;
 use rustup_utils::utils;
+use same_file::Handle;
 use std::env;
 use std::env::consts::EXE_SUFFIX;
 use std::path::{Path, PathBuf, Component};
@@ -657,29 +658,70 @@ pub fn install_proxies() -> Result<()> {
     let ref bin_path = try!(utils::cargo_home()).join("bin");
     let ref rustup_path = bin_path.join(&format!("rustup{}", EXE_SUFFIX));
 
-    // Record the size of the known links, then when we get files which may or
-    // may not be links, we compare their size. Same size means probably a link.
-    let mut file_size = 0;
+    let rustup = Handle::from_path(rustup_path)?;
+
+    let mut tool_handles = Vec::new();
+    let mut link_afterwards = Vec::new();
 
     // Try to hardlink all the Rust exes to the rustup exe. Some systems,
     // like Android, does not support hardlinks, so we fallback to symlinks.
+    //
+    // Note that this function may not be running in the context of a fresh
+    // self update but rather as part of a normal update to fill in missing
+    // proxies. In that case our process may actually have the `rustup.exe`
+    // file open, and on systems like Windows that means that you can't
+    // even remove other hard links to the same file. Basically if we have
+    // `rustup.exe` open and running and `cargo.exe` is a hard link to that
+    // file, we can't remove `cargo.exe`.
+    //
+    // To avoid unnecessary errors from being returned here we use the
+    // `same-file` crate and its `Handle` type to avoid clobbering hard links
+    // that are already valid. If a hard link already points to the
+    // `rustup.exe` file then we leave it alone and move to the next one.
     for tool in TOOLS {
-        let ref tool_path = bin_path.join(&format!("{}{}", tool, EXE_SUFFIX));
-        if tool_path.exists() {
-            file_size = utils::file_size(tool_path)?;
+        let tool_path = bin_path.join(&format!("{}{}", tool, EXE_SUFFIX));
+        if let Ok(handle) = Handle::from_path(&tool_path) {
+            tool_handles.push(handle);
+            if rustup == *tool_handles.last().unwrap() {
+                continue
+            }
         }
-        try!(utils::hard_or_symlink_file(rustup_path, tool_path));
+        link_afterwards.push(tool_path);
     }
 
     for tool in DUP_TOOLS {
         let ref tool_path = bin_path.join(&format!("{}{}", tool, EXE_SUFFIX));
-        if tool_path.exists() && (file_size == 0 || utils::file_size(tool_path)? != file_size) {
-            warn!("tool `{}` is already installed, remove it from `{}`, then run `rustup update` \
-                   to have rustup manage this tool.",
-                  tool, bin_path.to_string_lossy());
-        } else {
-            try!(utils::hard_or_symlink_file(rustup_path, tool_path));
+        if let Ok(handle) = Handle::from_path(tool_path) {
+            // Like above, don't clobber anything that's already hardlinked to
+            // avoid extraneous errors from being returned.
+            if rustup == handle {
+                continue
+            }
+
+            // If this file exists and is *not* equivalent to all other
+            // preexisting tools we found, then we're going to assume that it
+            // was preinstalled and actually pointing to a totally different
+            // binary. This is intended for cases where historically users
+            // rand `cargo install rustfmt` and so they had custom `rustfmt`
+            // and `cargo-fmt` executables lying around, but we as rustup have
+            // since started managing these tools.
+            //
+            // If the file is managed by rustup it should be equivalent to some
+            // previous file, and if it's not equivalent to anything then it's
+            // pretty likely that it needs to be dealt with manually.
+            if tool_handles.iter().all(|h| *h != handle) {
+                warn!("tool `{}` is already installed, remove it from `{}`, then run `rustup update` \
+                       to have rustup manage this tool.",
+                      tool, bin_path.to_string_lossy());
+                continue
+            }
         }
+        try!(utils::hard_or_symlink_file(rustup_path, tool_path));
+    }
+
+    drop(tool_handles);
+    for path in link_afterwards {
+        try!(utils::hard_or_symlink_file(rustup_path, &path));
     }
 
     Ok(())
diff --git a/src/rustup-mock/src/clitools.rs b/src/rustup-mock/src/clitools.rs
index 4dcb70e9c19..a7254b25350 100644
--- a/src/rustup-mock/src/clitools.rs
+++ b/src/rustup-mock/src/clitools.rs
@@ -322,13 +322,19 @@ pub fn run(config: &Config, name: &str, args: &[&str], env: &[(&str, &str)]) ->
     for env in env {
         cmd.env(env.0, env.1);
     }
+
+    println!("running {:?}", cmd);
     let out = cmd.output().expect("failed to run test command");
 
-    SanitizedOutput {
+    let output = SanitizedOutput {
         ok: out.status.success(),
         stdout: String::from_utf8(out.stdout).unwrap(),
         stderr: String::from_utf8(out.stderr).unwrap(),
-    }
+    };
+    println!("status: {}", out.status);
+    println!("----- stdout\n{}", output.stdout);
+    println!("----- stderr\n{}", output.stderr);
+    return output
 }
 
 // Creates a mock dist server populated with some test data
diff --git a/src/rustup-utils/src/raw.rs b/src/rustup-utils/src/raw.rs
index 00ed137f6b3..a4165e130aa 100644
--- a/src/rustup-utils/src/raw.rs
+++ b/src/rustup-utils/src/raw.rs
@@ -130,7 +130,7 @@ pub fn append_file(dest: &Path, line: &str) -> io::Result<()> {
     Ok(())
 }
 
-pub fn tee_file<W: io::Write>(path: &Path, mut w: &mut W) -> io::Result<()> {
+pub fn tee_file<W: io::Write>(path: &Path, w: &mut W) -> io::Result<()> {
     let mut file = try!(fs::OpenOptions::new()
                             .read(true)
                             .open(path));
@@ -213,7 +213,7 @@ fn symlink_junction_inner(target: &Path, junction: &Path) -> io::Result<()> {
                             ptr::null_mut());
 
         let mut data = [0u8; MAXIMUM_REPARSE_DATA_BUFFER_SIZE];
-        let mut db = data.as_mut_ptr()
+        let db = data.as_mut_ptr()
                         as *mut REPARSE_MOUNTPOINT_DATA_BUFFER;
         let buf = &mut (*db).ReparseTarget as *mut _;
         let mut i = 0;
diff --git a/tests/cli-inst-interactive.rs b/tests/cli-inst-interactive.rs
index de1a132fc31..a2379fe5b89 100644
--- a/tests/cli-inst-interactive.rs
+++ b/tests/cli-inst-interactive.rs
@@ -96,6 +96,8 @@ fn blank_lines_around_stderr_log_output_update() {
     setup(&|config| {
         run_input(config, &["rustup-init"], "\n\n");
         let out = run_input(config, &["rustup-init"], "\n\n");
+        println!("-- stdout --\n {}", out.stdout);
+        println!("-- stderr --\n {}", out.stderr);
 
         assert!(out.stdout.contains(r"
 3) Cancel installation
diff --git a/tests/cli-self-upd.rs b/tests/cli-self-upd.rs
index c8bc9c4b45e..d2bf24f37b3 100644
--- a/tests/cli-self-upd.rs
+++ b/tests/cli-self-upd.rs
@@ -1250,28 +1250,36 @@ fn rls_proxy_set_up_after_update() {
 
 #[test]
 fn update_does_not_overwrite_rustfmt() {
-    update_setup(&|config, _| {
+    update_setup(&|config, self_dist| {
         expect_ok(config, &["rustup-init", "-y"]);
+        let version = env!("CARGO_PKG_VERSION");
+        output_release_file(self_dist, "1", version);
+
+        // Since we just did a fresh install rustfmt will exist. Let's emulate
+        // it not existing in this test though by removing it just after our
+        // installation.
         let ref rustfmt_path = config.cargodir.join(format!("bin/rustfmt{}", EXE_SUFFIX));
+        assert!(rustfmt_path.exists());
+        fs::remove_file(rustfmt_path).unwrap();
         raw::write_file(rustfmt_path, "").unwrap();
         assert_eq!(utils::file_size(rustfmt_path).unwrap(), 0);
 
+        // Ok, now a self-update should complain about `rustfmt` not looking
+        // like rustup and the user should take some action.
         expect_stderr_ok(config, &["rustup", "self", "update"],
                          "`rustfmt` is already installed");
-        expect_ok(config, &["rustup", "self", "update"]);
         assert!(rustfmt_path.exists());
         assert_eq!(utils::file_size(rustfmt_path).unwrap(), 0);
 
-
-        // We run the test twice because the first time around none of the shims
-        // exist, and we want to check that out check for rustfmt works if there
-        // are shims or not.
-        let ref rustdoc_path = config.cargodir.join(format!("bin/rustdoc{}", EXE_SUFFIX));
-        assert!(rustdoc_path.exists());
-
-        expect_stderr_ok(config, &["rustup", "self", "update"],
-                         "`rustfmt` is already installed");
+        // Now simluate us removing the rustfmt executable and rerunning a self
+        // update, this should install the rustup shim. Note that we don't run
+        // `rustup` here but rather the rustup we've actually installed, this'll
+        // help reproduce bugs related to having that file being opened by the
+        // current process.
+        fs::remove_file(rustfmt_path).unwrap();
+        let installed_rustup = config.cargodir.join("bin/rustup");
+        expect_ok(config, &[installed_rustup.to_str().unwrap(), "self", "update"]);
         assert!(rustfmt_path.exists());
-        assert_eq!(utils::file_size(rustfmt_path).unwrap(), 0);
+        assert!(utils::file_size(rustfmt_path).unwrap() > 0);
     });
 }