diff --git a/mercurial/help/config.txt b/mercurial/help/config.txt
--- a/mercurial/help/config.txt
+++ b/mercurial/help/config.txt
@@ -2007,7 +2007,9 @@
 
 ``origbackuppath``
     The path to a directory used to store generated .orig files. If the path is
-    not a directory, one will be created.
+    not a directory, one will be created.  If set, files stored in this
+    directory have the same name as the original file and do not have a .orig
+    suffix.
 
 ``paginate``
   Control the pagination of command output (default: True). See :hg:`help pager`
diff --git a/mercurial/scmutil.py b/mercurial/scmutil.py
--- a/mercurial/scmutil.py
+++ b/mercurial/scmutil.py
@@ -553,7 +553,7 @@
     '''customize where .orig files are created
 
     Fetch user defined path from config file: [ui] origbackuppath = <path>
-    Fall back to default (filepath) if not specified
+    Fall back to default (filepath with .orig suffix) if not specified
     '''
     origbackuppath = ui.config('ui', 'origbackuppath')
     if origbackuppath is None:
@@ -563,11 +563,24 @@
     fullorigpath = repo.wjoin(origbackuppath, filepathfromroot)
 
     origbackupdir = repo.vfs.dirname(fullorigpath)
-    if not repo.vfs.exists(origbackupdir):
+    if not repo.vfs.isdir(origbackupdir):
         ui.note(_('creating directory: %s\n') % origbackupdir)
+
+        # Remove any files that conflict with the backup file's path
+        for f in util.finddirs(fullorigpath):
+            if repo.vfs.exists(f):
+                if repo.vfs.isfile(f):
+                    ui.note(_('removing conflicting file: %s\n') % f)
+                    repo.vfs.unlink(f)
+                break
+
         util.makedirs(origbackupdir)
 
-    return fullorigpath + ".orig"
+    if repo.vfs.isdir(fullorigpath):
+        ui.note(_('removing conflicting directory: %s\n') % fullorigpath)
+        repo.vfs.rmtree(fullorigpath, forcibly=True)
+
+    return fullorigpath
 
 class _containsnode(object):
     """proxy __contains__(node) to container.__contains__ which accepts revs"""
diff --git a/tests/test-largefiles-misc.t b/tests/test-largefiles-misc.t
--- a/tests/test-largefiles-misc.t
+++ b/tests/test-largefiles-misc.t
@@ -528,13 +528,13 @@
   $ echo moremore >> anotherlarge
   $ hg revert anotherlarge -v --config 'ui.origbackuppath=.hg/origbackups'
   creating directory: $TESTTMP/addrm2/.hg/origbackups/.hglf/sub (glob)
-  saving current version of ../.hglf/sub/anotherlarge as $TESTTMP/addrm2/.hg/origbackups/.hglf/sub/anotherlarge.orig (glob)
+  saving current version of ../.hglf/sub/anotherlarge as $TESTTMP/addrm2/.hg/origbackups/.hglf/sub/anotherlarge (glob)
   reverting ../.hglf/sub/anotherlarge (glob)
   creating directory: $TESTTMP/addrm2/.hg/origbackups/sub (glob)
   found 90c622cf65cebe75c5842f9136c459333faf392e in store
   found 90c622cf65cebe75c5842f9136c459333faf392e in store
   $ ls ../.hg/origbackups/sub
-  anotherlarge.orig
+  anotherlarge
   $ cd ..
 
 Test glob logging from the root dir
diff --git a/tests/test-merge-local.t b/tests/test-merge-local.t
--- a/tests/test-merge-local.t
+++ b/tests/test-merge-local.t
@@ -110,7 +110,7 @@
 
 Are orig files from the last commit where we want them?
   $ ls .hg/origbackups
-  zzz2_merge_bad.orig
+  zzz2_merge_bad
 
   $ hg diff --nodates | grep "^[+-][^<>]"
   --- a/zzz1_merge_ok
diff --git a/tests/test-mq-qpush-fail.t b/tests/test-mq-qpush-fail.t
--- a/tests/test-mq-qpush-fail.t
+++ b/tests/test-mq-qpush-fail.t
@@ -465,7 +465,7 @@
 test previous qpop (with --force and --config) saved .orig files to where user
 wants them
   $ ls .hg/origbackups
-  b.orig
+  b
   $ rm -rf .hg/origbackups
 
   $ cd ..
diff --git a/tests/test-mq.t b/tests/test-mq.t
--- a/tests/test-mq.t
+++ b/tests/test-mq.t
@@ -1388,7 +1388,7 @@
   $ hg qpush -f --verbose --config 'ui.origbackuppath=.hg/origbackups'
   applying empty
   creating directory: $TESTTMP/forcepush/.hg/origbackups (glob)
-  saving current version of hello.txt as $TESTTMP/forcepush/.hg/origbackups/hello.txt.orig (glob)
+  saving current version of hello.txt as $TESTTMP/forcepush/.hg/origbackups/hello.txt (glob)
   patching file hello.txt
   committing files:
   hello.txt
@@ -1422,7 +1422,7 @@
 test that the previous call to qpush with -f (--force) and --config actually put
 the orig files out of the working copy
   $ ls .hg/origbackups
-  hello.txt.orig
+  hello.txt
 
 test popping revisions not in working dir ancestry
 
diff --git a/tests/test-origbackup-conflict.t b/tests/test-origbackup-conflict.t
new file mode 100644
--- /dev/null
+++ b/tests/test-origbackup-conflict.t
@@ -0,0 +1,80 @@
+Set up repo
+
+  $ cat << EOF >> $HGRCPATH
+  > [ui]
+  > origbackuppath=.hg/origbackups
+  > [merge]
+  > checkunknown=warn
+  > EOF
+  $ hg init repo
+  $ cd repo
+  $ echo base > base
+  $ hg add base
+  $ hg commit -m "base"
+
+Make a dir named b that contains a file
+
+  $ mkdir -p b
+  $ echo c1 > b/c
+  $ hg add b/c
+  $ hg commit -m "c1"
+  $ hg bookmark c1
+
+Peform an update that causes b/c to be backed up
+
+  $ hg up 0
+  0 files updated, 0 files merged, 1 files removed, 0 files unresolved
+  (leaving bookmark c1)
+  $ mkdir -p b
+  $ echo c2 > b/c
+  $ hg up --verbose c1
+  resolving manifests
+  b/c: replacing untracked file
+  getting b/c
+  creating directory: $TESTTMP/repo/.hg/origbackups/b
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  (activating bookmark c1)
+  $ test -f .hg/origbackups/b/c
+
+Make a file named b
+
+  $ hg up 0
+  0 files updated, 0 files merged, 1 files removed, 0 files unresolved
+  (leaving bookmark c1)
+  $ echo b1 > b
+  $ hg add b
+  $ hg commit -m b1
+  created new head
+  $ hg bookmark b1
+
+Perform an update that causes b to be backed up - it should replace the backup b dir
+
+  $ hg up 0
+  0 files updated, 0 files merged, 1 files removed, 0 files unresolved
+  (leaving bookmark b1)
+  $ echo b2 > b
+  $ hg up --verbose b1
+  resolving manifests
+  b: replacing untracked file
+  getting b
+  removing conflicting directory: $TESTTMP/repo/.hg/origbackups/b
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  (activating bookmark b1)
+  $ test -f .hg/origbackups/b
+
+Perform an update the causes b/c to be backed up again - it should replace the backup b file
+
+  $ hg up 0
+  0 files updated, 0 files merged, 1 files removed, 0 files unresolved
+  (leaving bookmark b1)
+  $ mkdir b
+  $ echo c3 > b/c
+  $ hg up --verbose c1
+  resolving manifests
+  b/c: replacing untracked file
+  getting b/c
+  creating directory: $TESTTMP/repo/.hg/origbackups/b
+  removing conflicting file: $TESTTMP/repo/.hg/origbackups/b
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  (activating bookmark c1)
+  $ test -d .hg/origbackups/b
diff --git a/tests/test-resolve.t b/tests/test-resolve.t
--- a/tests/test-resolve.t
+++ b/tests/test-resolve.t
@@ -255,8 +255,8 @@
   warning: conflicts while merging file2! (edit, then use 'hg resolve --mark')
   [1]
   $ ls .hg/origbackups
-  file1.orig
-  file2.orig
+  file1
+  file2
   $ grep '<<<' file1 > /dev/null
   $ grep '<<<' file2 > /dev/null
 
diff --git a/tests/test-revert.t b/tests/test-revert.t
--- a/tests/test-revert.t
+++ b/tests/test-revert.t
@@ -92,7 +92,7 @@
   $ echo z > e
   $ hg revert --all -v --config 'ui.origbackuppath=.hg/origbackups'
   creating directory: $TESTTMP/repo/.hg/origbackups (glob)
-  saving current version of e as $TESTTMP/repo/.hg/origbackups/e.orig (glob)
+  saving current version of e as $TESTTMP/repo/.hg/origbackups/e
   reverting e
   $ rm -rf .hg/origbackups
 
diff --git a/tests/test-shelve.t b/tests/test-shelve.t
--- a/tests/test-shelve.t
+++ b/tests/test-shelve.t
@@ -1260,7 +1260,7 @@
   unresolved conflicts (see 'hg resolve', then 'hg unshelve --continue')
   [1]
   $ ls .hg/origbackups
-  root.orig
+  root
   $ rm -rf .hg/origbackups
 
 test Abort unshelve always gets user out of the unshelved state
diff --git a/tests/test-subrepo-git.t b/tests/test-subrepo-git.t
--- a/tests/test-subrepo-git.t
+++ b/tests/test-subrepo-git.t
@@ -885,9 +885,9 @@
   $ hg revert --all --verbose --config 'ui.origbackuppath=.hg/origbackups'
   reverting subrepo ../gitroot
   creating directory: $TESTTMP/tc/.hg/origbackups (glob)
-  saving current version of foobar as $TESTTMP/tc/.hg/origbackups/foobar.orig (glob)
+  saving current version of foobar as $TESTTMP/tc/.hg/origbackups/foobar (glob)
   $ ls .hg/origbackups
-  foobar.orig
+  foobar
   $ rm -rf .hg/origbackups
 
 show file at specific revision