diff --git a/src/components/button/button.js b/src/components/button/button.js
index d7346e3e7f3..9211d85746b 100644
--- a/src/components/button/button.js
+++ b/src/components/button/button.js
@@ -59,11 +59,9 @@ function MdButtonDirective($mdInkRipple, $mdTheming, $mdAria) {
   }
   
   function getTemplate(element, attr) {
-    if (isAnchor(attr)) {
-      return '<a class="md-button" ng-transclude></a>';
-    } else {
-      return '<button class="md-button" ng-transclude></button>';
-    }
+    return isAnchor(attr) ?
+           '<a class="md-button" ng-transclude></a>' :
+           '<button class="md-button" ng-transclude></button>';
   }
 
   function postLink(scope, element, attr) {
@@ -78,8 +76,8 @@ function MdButtonDirective($mdInkRipple, $mdTheming, $mdAria) {
 
     // For anchor elements, we have to set tabindex manually when the 
     // element is disabled
-    if (isAnchor(attr)) {
-      scope.$watch(function() {return attr.ngDisabled;}, function(isDisabled) {
+    if (isAnchor(attr) && angular.isDefined(attr.ngDisabled) ) {
+      scope.$watch(attr.ngDisabled, function(isDisabled) {
         element.attr('tabindex', isDisabled ? -1 : 0);
       });
     }
diff --git a/src/components/button/button.spec.js b/src/components/button/button.spec.js
index 31e9b58f259..614504d0184 100644
--- a/src/components/button/button.spec.js
+++ b/src/components/button/button.spec.js
@@ -3,23 +3,20 @@ describe('md-button', function() {
   beforeEach(TestUtil.mockRaf);
   beforeEach(module('material.components.button'));
 
-  it('should be anchor if href attr', inject(function($compile, $rootScope) {
-    var button = $compile('<md-button href="/link">')($rootScope.$new());
+  it('should convert attributes on an md-button to attributes on the generated button', inject(function($compile, $rootScope) {
+    var button = $compile('<md-button hide hide-sm></md-button>')($rootScope);
     $rootScope.$apply();
-    expect(button[0].tagName.toLowerCase()).toEqual('a');
+    expect(button[0].hasAttribute('hide')).toBe(true);
+    expect(button[0].hasAttribute('hide-sm')).toBe(true);
   }));
 
-  it('should be anchor if ng-href attr', inject(function($compile, $rootScope) {
-    var button = $compile('<md-button ng-href="/link">')($rootScope.$new());
-    $rootScope.$apply();
-    expect(button[0].tagName.toLowerCase()).toEqual('a');
+  it('should only have one ripple container when a custom ripple color is set', inject(function ($compile, $rootScope, $timeout) {
+    var button = $compile('<md-button md-ink-ripple="#f00">button</md-button>')($rootScope);
+    var scope = button.eq(0).scope();
+    scope._onInput({ isFirst: true, eventType: Hammer.INPUT_START, center: { x: 0, y: 0 } });
+    expect(button[0].getElementsByClassName('md-ripple-container').length).toBe(1);
   }));
 
-  it('should be button otherwise', inject(function($compile, $rootScope) {
-    var button = $compile('<md-button>')($rootScope.$new());
-    $rootScope.$apply();
-    expect(button[0].tagName.toLowerCase()).toEqual('button');
-  }));
 
   it('should expect an aria-label if element has no text', inject(function($compile, $rootScope, $log) {
     spyOn($log, 'warn');
@@ -33,18 +30,62 @@ describe('md-button', function() {
     expect($log.warn).not.toHaveBeenCalled();
   }));
 
-  it('should convert attributes on an md-button to attributes on the generated button', inject(function($compile, $rootScope) {
-    var button = $compile('<md-button hide hide-sm></md-button>')($rootScope);
-    $rootScope.$apply();
-    expect(button[0].hasAttribute('hide')).toBe(true);
-    expect(button[0].hasAttribute('hide-sm')).toBe(true);
-  }));
 
-  it('should only have one ripple container when a custom ripple color is set', inject(function ($compile, $rootScope, $timeout) {
-    var button = $compile('<md-button md-ink-ripple="#f00">button</md-button>')($rootScope);
-    var scope = button.eq(0).scope();
-    scope._onInput({ isFirst: true, eventType: Hammer.INPUT_START, center: { x: 0, y: 0 } });
-    expect(button[0].getElementsByClassName('md-ripple-container').length).toBe(1);
-  }));
+  describe('with href or ng-href', function() {
+
+    it('should be anchor if href attr', inject(function($compile, $rootScope) {
+      var button = $compile('<md-button href="/link">')($rootScope.$new());
+      $rootScope.$apply();
+      expect(button[0].tagName.toLowerCase()).toEqual('a');
+    }));
+
+    it('should be anchor if ng-href attr', inject(function($compile, $rootScope) {
+      var button = $compile('<md-button ng-href="/link">')($rootScope.$new());
+      $rootScope.$apply();
+      expect(button[0].tagName.toLowerCase()).toEqual('a');
+    }));
+
+    it('should be button otherwise', inject(function($compile, $rootScope) {
+      var button = $compile('<md-button>')($rootScope.$new());
+      $rootScope.$apply();
+      expect(button[0].tagName.toLowerCase()).toEqual('button');
+    }));
+
+  });
+
+
+  describe('with ng-disabled', function() {
+
+    it('should not set `tabindex` when used without anchor attributes', inject(function ($compile, $rootScope, $timeout) {
+      var scope = angular.extend( $rootScope.$new(), { isDisabled : true } );
+      var button = $compile('<md-button ng-disabled="isDisabled">button</md-button>')(scope);
+      $rootScope.$apply();
+
+      expect(button[0].hasAttribute('tabindex')).toBe(false);
+    }));
+
+    it('should set `tabindex == -1` when used with href', inject(function ($compile, $rootScope, $timeout) {
+      var scope = angular.extend( $rootScope.$new(), { isDisabled : true } );
+      var button = $compile('<md-button ng-disabled="isDisabled" href="#nowhere">button</md-button>')(scope);
+
+      $rootScope.$apply();
+      expect(button.attr('tabindex')).toBe("-1");
+
+      $rootScope.$apply(function(){
+        scope.isDisabled = false;
+      });
+      expect(button.attr('tabindex')).toBe("0");
+
+    }));
+
+    it('should set `tabindex == -1` when used with ng-href', inject(function ($compile, $rootScope, $timeout) {
+      var scope = angular.extend( $rootScope.$new(), { isDisabled : true, url : "http://material.angularjs.org" });
+      var button = $compile('<md-button ng-disabled="isDisabled" ng-href="url">button</md-button>')(scope);
+      $rootScope.$apply();
+
+      expect(button.attr('tabindex')).toBe("-1");
+    }));
+
+  })
 
 });