diff --git a/tokio/src/sync/watch.rs b/tokio/src/sync/watch.rs
index 5673e0fca78..ab0ada7d098 100644
--- a/tokio/src/sync/watch.rs
+++ b/tokio/src/sync/watch.rs
@@ -60,6 +60,7 @@ use crate::loom::sync::atomic::Ordering::Relaxed;
 use crate::loom::sync::{Arc, RwLock, RwLockReadGuard};
 use std::mem;
 use std::ops;
+use std::panic;
 
 /// Receives values from the associated [`Sender`](struct@Sender).
 ///
@@ -530,27 +531,47 @@ impl<T> Sender<T> {
         Ok(())
     }
 
-    /// Sends a new value via the channel, notifying all receivers and returning
-    /// the previous value in the channel.
+    /// Modifies watched value, notifying all receivers.
     ///
-    /// This can be useful for reusing the buffers inside a watched value.
-    /// Additionally, this method permits sending values even when there are no
-    /// receivers.
+    /// This can useful for modifying the watched value, without
+    /// having to allocate a new instance. Additionally, this
+    /// method permits sending values even when there are no receivers.
+    ///
+    /// # Panics
+    ///
+    /// This function panics if calling `func` results in a panic.
+    /// No receivers are notified if panic occurred, but if the closure has modified
+    /// the value, that change is still visible to future calls to `borrow`.
     ///
     /// # Examples
     ///
     /// ```
     /// use tokio::sync::watch;
     ///
-    /// let (tx, _rx) = watch::channel(1);
-    /// assert_eq!(tx.send_replace(2), 1);
-    /// assert_eq!(tx.send_replace(3), 2);
+    /// struct State {
+    ///     counter: usize,
+    /// }
+    /// let (state_tx, state_rx) = watch::channel(State { counter: 0 });
+    /// state_tx.send_modify(|state| state.counter += 1);
+    /// assert_eq!(state_rx.borrow().counter, 1);
     /// ```
-    pub fn send_replace(&self, value: T) -> T {
-        let old = {
+    pub fn send_modify<F>(&self, func: F)
+    where
+        F: FnOnce(&mut T),
+    {
+        {
             // Acquire the write lock and update the value.
             let mut lock = self.shared.value.write().unwrap();
-            let old = mem::replace(&mut *lock, value);
+            // Update the value and catch possible panic inside func.
+            let result = panic::catch_unwind(panic::AssertUnwindSafe(|| {
+                func(&mut lock);
+            }));
+            // If the func panicked return the panic to the caller.
+            if let Err(error) = result {
+                // Drop the lock to avoid poisoning it.
+                drop(lock);
+                panic::resume_unwind(error);
+            }
 
             self.shared.state.increment_version();
 
@@ -560,14 +581,32 @@ impl<T> Sender<T> {
             // that receivers are able to figure out the version number of the
             // value they are currently looking at.
             drop(lock);
+        }
 
-            old
-        };
-
-        // Notify all watchers
         self.shared.notify_rx.notify_waiters();
+    }
+
+    /// Sends a new value via the channel, notifying all receivers and returning
+    /// the previous value in the channel.
+    ///
+    /// This can be useful for reusing the buffers inside a watched value.
+    /// Additionally, this method permits sending values even when there are no
+    /// receivers.
+    ///
+    /// # Examples
+    ///
+    /// ```
+    /// use tokio::sync::watch;
+    ///
+    /// let (tx, _rx) = watch::channel(1);
+    /// assert_eq!(tx.send_replace(2), 1);
+    /// assert_eq!(tx.send_replace(3), 2);
+    /// ```
+    pub fn send_replace(&self, mut value: T) -> T {
+        // swap old watched value with the new one
+        self.send_modify(|old| mem::swap(old, &mut value));
 
-        old
+        value
     }
 
     /// Returns a reference to the most recently sent value
diff --git a/tokio/tests/sync_watch.rs b/tokio/tests/sync_watch.rs
index 8b9ea81bb89..2097b8bdfdb 100644
--- a/tokio/tests/sync_watch.rs
+++ b/tokio/tests/sync_watch.rs
@@ -211,3 +211,31 @@ fn reopened_after_subscribe() {
     drop(rx);
     assert!(tx.is_closed());
 }
+
+#[test]
+fn send_modify_panic() {
+    let (tx, mut rx) = watch::channel("one");
+
+    tx.send_modify(|old| *old = "two");
+    assert_eq!(*rx.borrow_and_update(), "two");
+
+    let mut rx2 = rx.clone();
+    assert_eq!(*rx2.borrow_and_update(), "two");
+
+    let mut task = spawn(rx2.changed());
+
+    let result = std::panic::catch_unwind(std::panic::AssertUnwindSafe(|| {
+        tx.send_modify(|old| {
+            *old = "panicked";
+            panic!();
+        })
+    }));
+    assert!(result.is_err());
+
+    assert_pending!(task.poll());
+    assert_eq!(*rx.borrow(), "panicked");
+
+    tx.send_modify(|old| *old = "three");
+    assert_ready_ok!(task.poll());
+    assert_eq!(*rx.borrow_and_update(), "three");
+}