diff --git a/mysql-test/r/rpl_do_grant.result b/mysql-test/r/rpl_do_grant.result
new file mode 100644
index 00000000000..fec935ae7ac
--- /dev/null
+++ b/mysql-test/r/rpl_do_grant.result
@@ -0,0 +1,26 @@
+slave stop;
+drop table if exists t1,t2,t3,t4,t5,t6,t7,t8,t9;
+reset master;
+reset slave;
+drop table if exists t1,t2,t3,t4,t5,t6,t7,t8,t9;
+slave start;
+delete from mysql.user where user='rpl_do_grant';
+delete from mysql.db where user='rpl_do_grant';
+flush privileges;
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+grant select on *.* to rpl_do_grant@localhost;
+grant drop on test.* to rpl_do_grant@localhost;
+show grants for rpl_do_grant@localhost;
+Grants for rpl_do_grant@localhost
+GRANT SELECT ON *.* TO 'rpl_do_grant'@'localhost'
+GRANT DROP ON `test`.* TO 'rpl_do_grant'@'localhost'
+set password for rpl_do_grant@localhost=password("does it work?");
+select password<>'' from mysql.user where user='rpl_do_grant';
+password<>''
+1
+delete from mysql.user where user='rpl_do_grant';
+delete from mysql.db where user='rpl_do_grant';
+flush privileges;
+flush privileges;
diff --git a/mysql-test/r/rpl_ignore_grant.result b/mysql-test/r/rpl_ignore_grant.result
new file mode 100644
index 00000000000..6cd7d5b4c00
--- /dev/null
+++ b/mysql-test/r/rpl_ignore_grant.result
@@ -0,0 +1,37 @@
+slave stop;
+drop table if exists t1,t2,t3,t4,t5,t6,t7,t8,t9;
+reset master;
+reset slave;
+drop table if exists t1,t2,t3,t4,t5,t6,t7,t8,t9;
+slave start;
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+grant select on *.* to rpl_ignore_grant@localhost;
+grant drop on test.* to rpl_ignore_grant@localhost;
+show grants for rpl_ignore_grant@localhost;
+Grants for rpl_ignore_grant@localhost
+GRANT SELECT ON *.* TO 'rpl_ignore_grant'@'localhost'
+GRANT DROP ON `test`.* TO 'rpl_ignore_grant'@'localhost'
+show grants for rpl_ignore_grant@localhost;
+There is no such grant defined for user 'rpl_ignore_grant' on host 'localhost'
+select count(*) from mysql.user where user='rpl_ignore_grant';
+count(*)
+0
+select count(*) from mysql.db where user='rpl_ignore_grant';
+count(*)
+0
+grant select on *.* to rpl_ignore_grant@localhost;
+set password for rpl_ignore_grant@localhost=password("does it work?");
+select password<>'' from mysql.user where user='rpl_ignore_grant';
+password<>''
+0
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
diff --git a/mysql-test/t/rpl_do_grant.test b/mysql-test/t/rpl_do_grant.test
new file mode 100644
index 00000000000..89ff1afb5c9
--- /dev/null
+++ b/mysql-test/t/rpl_do_grant.test
@@ -0,0 +1,46 @@
+# Test that GRANT and SET PASSWORD are replicated to the slave
+
+source include/master-slave.inc;
+
+# do not be influenced by other tests.
+connection master;
+delete from mysql.user where user='rpl_do_grant';
+delete from mysql.db where user='rpl_do_grant';
+flush privileges;
+save_master_pos;
+connection slave;
+sync_with_master;
+# if these DELETE did nothing on the master, we need to do them manually on the
+# slave.
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+
+# test replication of GRANT
+connection master;
+grant select on *.* to rpl_do_grant@localhost;
+grant drop on test.* to rpl_do_grant@localhost;
+save_master_pos;
+connection slave;
+sync_with_master;
+show grants for rpl_do_grant@localhost;
+
+# test replication of SET PASSWORD
+connection master;
+set password for rpl_do_grant@localhost=password("does it work?");
+save_master_pos;
+connection slave;
+sync_with_master;
+select password<>'' from mysql.user where user='rpl_do_grant';
+
+# clear what we have done, to not influence other tests.
+connection master;
+delete from mysql.user where user='rpl_do_grant';
+delete from mysql.db where user='rpl_do_grant';
+flush privileges;
+save_master_pos;
+connection slave;
+sync_with_master;
+# no need to delete manually, as the DELETEs must have done some real job on
+# master (updated binlog)
+flush privileges;
diff --git a/mysql-test/t/rpl_ignore_grant-slave.opt b/mysql-test/t/rpl_ignore_grant-slave.opt
new file mode 100644
index 00000000000..e931bfbd37e
--- /dev/null
+++ b/mysql-test/t/rpl_ignore_grant-slave.opt
@@ -0,0 +1 @@
+--replicate-wild-ignore-table=mysql.%
diff --git a/mysql-test/t/rpl_ignore_grant.test b/mysql-test/t/rpl_ignore_grant.test
new file mode 100644
index 00000000000..2fd7f186b3e
--- /dev/null
+++ b/mysql-test/t/rpl_ignore_grant.test
@@ -0,0 +1,57 @@
+# Test that GRANT is not replicated to the slave
+# when --replicate-wild-ignore-table=mysql.%
+# In BUG#980, this test would _randomly_ fail.
+
+source include/master-slave.inc;
+
+# do not be influenced by other tests.
+connection master;
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+save_master_pos;
+connection slave;
+sync_with_master;
+# as these DELETE were not replicated, we need to do them manually on the
+# slave.
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+
+# test non-replication of GRANT
+connection master;
+grant select on *.* to rpl_ignore_grant@localhost;
+grant drop on test.* to rpl_ignore_grant@localhost;
+show grants for rpl_ignore_grant@localhost;
+save_master_pos;
+connection slave;
+sync_with_master;
+--error 1141 #("no such grant for user")
+show grants for rpl_ignore_grant@localhost;
+# check it another way
+select count(*) from mysql.user where user='rpl_ignore_grant';
+select count(*) from mysql.db where user='rpl_ignore_grant';
+
+# test non-replication of SET PASSWORD
+# first force creation of the user on slave (because as the user does not exist
+# on slave, the SET PASSWORD may be replicated but silently do nothing; this is
+# not what we want; we want it to be not-replicated).
+grant select on *.* to rpl_ignore_grant@localhost;
+connection master;
+set password for rpl_ignore_grant@localhost=password("does it work?");
+save_master_pos;
+connection slave;
+sync_with_master;
+select password<>'' from mysql.user where user='rpl_ignore_grant';
+
+# clear what we have done, to not influence other tests.
+connection master;
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
+save_master_pos;
+connection slave;
+sync_with_master;
+delete from mysql.user where user='rpl_ignore_grant';
+delete from mysql.db where user='rpl_ignore_grant';
+flush privileges;
diff --git a/sql/sql_acl.cc b/sql/sql_acl.cc
index fd7ea5aac51..3a3de2abf10 100644
--- a/sql/sql_acl.cc
+++ b/sql/sql_acl.cc
@@ -1233,6 +1233,25 @@ static bool update_user_table(THD *thd, const char *host, const char *user,
   bzero((char*) &tables,sizeof(tables));
   tables.alias=tables.real_name=(char*) "user";
   tables.db=(char*) "mysql";
+#ifdef HAVE_REPLICATION
+  /*
+    GRANT and REVOKE are applied the slave in/exclusion rules as they are
+    some kind of updates to the mysql.% tables.
+  */
+  if (thd->slave_thread && table_rules_on)
+  {
+    /* 
+       The tables must be marked "updating" so that tables_ok() takes them into
+       account in tests.
+    */
+    tables.updating=1;
+    /* Thanks to bzero, tables.next==0 */
+    if (!tables_ok(0, &tables))
+      DBUG_RETURN(0);
+    tables.updating=0;
+  }
+#endif
+
   if (!(table=open_ltable(thd,&tables,TL_WRITE)))
     DBUG_RETURN(1); /* purecov: deadcode */
   table->field[0]->store(host,(uint) strlen(host));