diff --git a/src/components/tabs/js/tabsController.js b/src/components/tabs/js/tabsController.js
index 48362251fda..7bdb684c456 100644
--- a/src/components/tabs/js/tabsController.js
+++ b/src/components/tabs/js/tabsController.js
@@ -159,6 +159,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * @param stretchTabs
    */
   function handleStretchTabs (stretchTabs) {
+    var elements = getElements();
     angular.element(elements.wrapper).toggleClass('md-stretch-tabs', shouldStretchTabs());
     updateInkBarStyles();
   }
@@ -169,6 +170,8 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
 
   function handleMaxTabWidth (newWidth, oldWidth) {
     if (newWidth !== oldWidth) {
+      var elements = getElements();
+
       angular.forEach(elements.tabs, function(tab) {
         tab.style.maxWidth = newWidth + 'px';
       });
@@ -200,7 +203,9 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * @param left
    */
   function handleOffsetChange (left) {
+    var elements = getElements();
     var newValue = ctrl.shouldCenterTabs ? '' : '-' + left + 'px';
+
     angular.element(elements.paging).css($mdConstant.CSS.TRANSFORM, 'translate3d(' + newValue + ', 0, 0)');
     $scope.$broadcast('$mdTabsPaginationChanged');
   }
@@ -212,7 +217,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    */
   function handleFocusIndexChange (newIndex, oldIndex) {
     if (newIndex === oldIndex) return;
-    if (!elements.tabs[ newIndex ]) return;
+    if (!getElements().tabs[ newIndex ]) return;
     adjustOffset();
     redirectFocus();
   }
@@ -320,6 +325,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * Slides the tabs over approximately one page forward.
    */
   function nextPage () {
+    var elements = getElements();
     var viewportWidth = elements.canvas.clientWidth,
         totalWidth    = viewportWidth + ctrl.offsetLeft,
         i, tab;
@@ -334,7 +340,8 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * Slides the tabs over approximately one page backward.
    */
   function previousPage () {
-    var i, tab;
+    var i, tab, elements = getElements();
+
     for (i = 0; i < elements.tabs.length; i++) {
       tab = elements.tabs[ i ];
       if (tab.offsetLeft + tab.offsetWidth >= ctrl.offsetLeft) break;
@@ -355,7 +362,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
   }
 
   function handleInkBar (hide) {
-    angular.element(elements.inkBar).toggleClass('ng-hide', hide);
+    angular.element(getElements().inkBar).toggleClass('ng-hide', hide);
   }
 
   /**
@@ -461,6 +468,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * @returns {*|boolean}
    */
   function canPageForward () {
+    var elements = getElements();
     var lastTab = elements.tabs[ elements.tabs.length - 1 ];
     return lastTab && lastTab.offsetLeft + lastTab.offsetWidth > elements.canvas.clientWidth +
         ctrl.offsetLeft;
@@ -497,7 +505,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
   function shouldPaginate () {
     if (ctrl.noPagination || !loaded) return false;
     var canvasWidth = $element.prop('clientWidth');
-    angular.forEach(elements.dummies, function (tab) { canvasWidth -= tab.offsetWidth; });
+    angular.forEach(getElements().dummies, function (tab) { canvasWidth -= tab.offsetWidth; });
     return canvasWidth < 0;
   }
 
@@ -553,6 +561,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * Sets or clears fixed width for md-pagination-wrapper depending on if tabs should stretch.
    */
   function updatePagingWidth() {
+    var elements = getElements();
     if (shouldStretchTabs()) {
       angular.element(elements.paging).css('width', '');
     } else {
@@ -566,7 +575,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
   function calcPagingWidth () {
     var width = 1;
 
-    angular.forEach(elements.dummies, function (element) {
+    angular.forEach(getElements().dummies, function (element) {
       //-- Uses the larger value between `getBoundingClientRect().width` and `offsetWidth`.  This
       //   prevents `offsetWidth` value from being rounded down and causing wrapping issues, but
       //   also handles scenarios where `getBoundingClientRect()` is inaccurate (ie. tabs inside
@@ -616,13 +625,15 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * issues when attempting to focus an item that is out of view.
    */
   function redirectFocus () {
-    elements.dummies[ ctrl.focusIndex ].focus();
+    getElements().dummies[ ctrl.focusIndex ].focus();
   }
 
   /**
    * Forces the pagination to move the focused tab into view.
    */
   function adjustOffset (index) {
+    var elements = getElements();
+
     if (index == null) index = ctrl.focusIndex;
     if (!elements.tabs[ index ]) return;
     if (ctrl.shouldCenterTabs) return;
@@ -669,6 +680,8 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
     if (!ctrl.dynamicHeight) return $element.css('height', '');
     if (!ctrl.tabs.length) return queue.push(updateHeightFromContent);
 
+    var elements = getElements();
+
     var tabContent    = elements.contents[ ctrl.selectedIndex ],
         contentHeight = tabContent ? tabContent.offsetHeight : 0,
         tabsHeight    = elements.wrapper.offsetHeight,
@@ -727,6 +740,8 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * @returns {*}
    */
   function updateInkBarStyles () {
+    var elements = getElements();
+
     if (!elements.tabs[ ctrl.selectedIndex ]) {
       angular.element(elements.inkBar).css({ left: 'auto', right: 'auto' });
       return;
@@ -755,6 +770,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * Adds left/right classes so that the ink bar will animate properly.
    */
   function updateInkBarClassName () {
+    var elements = getElements();
     var newIndex = ctrl.selectedIndex,
         oldIndex = ctrl.lastSelectedIndex,
         ink      = angular.element(elements.inkBar);
@@ -770,6 +786,8 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * @returns {*}
    */
   function fixOffset (value) {
+    var elements = getElements();
+
     if (!elements.tabs.length || !ctrl.shouldPaginate) return 0;
     var lastTab    = elements.tabs[ elements.tabs.length - 1 ],
         totalWidth = lastTab.offsetLeft + lastTab.offsetWidth;
@@ -784,6 +802,7 @@ function MdTabsController ($scope, $element, $window, $mdConstant, $mdTabInkRipp
    * @param element
    */
   function attachRipple (scope, element) {
+    var elements = getElements();
     var options = { colorElement: angular.element(elements.inkBar) };
     $mdTabInkRipple.attach(scope, element, options);
   }
diff --git a/src/components/tabs/js/tabsDirective.js b/src/components/tabs/js/tabsDirective.js
index ece61e366f7..0d67992e4cc 100644
--- a/src/components/tabs/js/tabsDirective.js
+++ b/src/components/tabs/js/tabsDirective.js
@@ -154,7 +154,7 @@ function MdTabs () {
                   'md-scope="::tab.parent"></md-tab-item> ' +
               '<md-ink-bar></md-ink-bar> ' +
             '</md-pagination-wrapper> ' +
-            '<div class="_md-visually-hidden md-dummy-wrapper"> ' +
+            '<md-tabs-dummy-wrapper class="_md-visually-hidden md-dummy-wrapper"> ' +
               '<md-dummy-tab ' +
                   'class="md-tab" ' +
                   'tabindex="-1" ' +
@@ -168,7 +168,7 @@ function MdTabs () {
                   'ng-repeat="tab in $mdTabsCtrl.tabs" ' +
                   'md-tabs-template="::tab.label" ' +
                   'md-scope="::tab.parent"></md-dummy-tab> ' +
-            '</div> ' +
+            '</md-tabs-dummy-wrapper> ' +
           '</md-tabs-canvas> ' +
         '</md-tabs-wrapper> ' +
         '<md-tabs-content-wrapper ng-show="$mdTabsCtrl.hasContent && $mdTabsCtrl.selectedIndex >= 0" class="_md"> ' +
diff --git a/src/components/tabs/js/tabsDummyWrapperDirective.js b/src/components/tabs/js/tabsDummyWrapperDirective.js
new file mode 100644
index 00000000000..358d4257df7
--- /dev/null
+++ b/src/components/tabs/js/tabsDummyWrapperDirective.js
@@ -0,0 +1,36 @@
+angular
+  .module('material.components.tabs')
+  .directive('mdTabsDummyWrapper', MdTabsDummyWrapper);
+
+/**
+ * @private
+ *
+ * @param $mdUtil
+ * @returns {{require: string, link: link}}
+ * @constructor
+ * 
+ * @ngInject
+ */
+function MdTabsDummyWrapper ($mdUtil) {
+  return {
+    require: '^?mdTabs',
+    link:    function link (scope, element, attr, ctrl) {
+      if (!ctrl) return;
+
+      var observer = new MutationObserver(function(mutations) {
+        ctrl.updatePagination();
+        ctrl.updateInkBarStyles();
+      });
+      var config = { childList: true, subtree: true };
+
+      observer.observe(element[0], config);
+
+      // Disconnect the observer
+      scope.$on('$destroy', function() {
+        if (observer) {
+          observer.disconnect();
+        }
+      });
+    }
+  };
+}
diff --git a/src/components/tabs/js/tabsTemplateDirective.js b/src/components/tabs/js/tabsTemplateDirective.js
index 6d0f54923f7..d04d5b7c1c5 100644
--- a/src/components/tabs/js/tabsTemplateDirective.js
+++ b/src/components/tabs/js/tabsTemplateDirective.js
@@ -15,13 +15,12 @@ function MdTabsTemplate ($compile, $mdUtil) {
   };
   function link (scope, element, attr, ctrl) {
     if (!ctrl) return;
+
     var compileScope = ctrl.enableDisconnect ? scope.compileScope.$new() : scope.compileScope;
+
     element.html(scope.template);
     $compile(element.contents())(compileScope);
-    element.on('DOMSubtreeModified', function () {
-      ctrl.updatePagination();
-      ctrl.updateInkBarStyles();
-    });
+
     return $mdUtil.nextTick(handleScope);
 
     function handleScope () {
diff --git a/src/components/tabs/tabs.spec.js b/src/components/tabs/tabs.spec.js
index 793e479497d..a7131c5964e 100644
--- a/src/components/tabs/tabs.spec.js
+++ b/src/components/tabs/tabs.spec.js
@@ -232,6 +232,63 @@ describe('<md-tabs>', function () {
       expect(tabs1[ 0 ].querySelector('md-tab-content').textContent.trim()).toBe('content that!');
     });
 
+    it('updates pagination and ink styles when string labels change', function(done) {
+      inject(function($rootScope) {
+        // Setup our initial label
+        $rootScope.$apply('label = "Some Label"');
+
+        // Init our variables
+        var template = '<md-tabs><md-tab label="{{label}}"></md-tab></md-tabs>';
+        var tabs = setup(template);
+        var ctrl = tabs.controller('mdTabs');
+
+        // Setup spies
+        spyOn(ctrl, 'updatePagination');
+        spyOn(ctrl, 'updateInkBarStyles');
+
+        // Change the label
+        $rootScope.$apply('label="Another Label"');
+
+        // Use window.setTimeout to add our expectations to the end of the call stack, after the
+        // MutationObservers have already fired
+        window.setTimeout(function() {
+          // Fire expectations
+          expect(ctrl.updatePagination.calls.count()).toBe(1);
+          expect(ctrl.updateInkBarStyles.calls.count()).toBe(1);
+
+          done();
+        });
+      })
+    });
+
+    it('updates pagination and ink styles when HTML labels change', function(done) {
+      inject(function($rootScope) {
+        // Setup our initial label
+        $rootScope.$apply('label = "Some Label"');
+
+        // Init our variables
+        var template = '<md-tabs><md-tab><md-tab-label>{{label}}</md-tab-label></md-tab></md-tabs>';
+        var tabs = setup(template);
+        var ctrl = tabs.controller('mdTabs');
+
+        // Setup spies
+        spyOn(ctrl, 'updatePagination');
+        spyOn(ctrl, 'updateInkBarStyles');
+
+        // Change the label
+        $rootScope.$apply('label="Another Label"');
+
+        // Use window.setTimeout to add our expectations to the end of the call stack, after the
+        // MutationObservers have already fired
+        window.setTimeout(function() {
+          // Fire expectations
+          expect(ctrl.updatePagination.calls.count()).toBe(1);
+          expect(ctrl.updateInkBarStyles.calls.count()).toBe(1);
+
+          done();
+        });
+      })
+    });
   });
 
   describe('aria', function () {