diff --git a/rxjava-core/src/main/java/rx/operators/OperationObserveOn.java b/rxjava-core/src/main/java/rx/operators/OperationObserveOn.java
index 12276c7b8d..201b3c53f0 100644
--- a/rxjava-core/src/main/java/rx/operators/OperationObserveOn.java
+++ b/rxjava-core/src/main/java/rx/operators/OperationObserveOn.java
@@ -30,6 +30,7 @@
 import rx.Observer;
 import rx.Scheduler;
 import rx.Subscription;
+import rx.concurrency.ImmediateScheduler;
 import rx.concurrency.Schedulers;
 import rx.util.functions.Func1;
 
@@ -50,7 +51,12 @@ public ObserveOn(Observable<T> source, Scheduler scheduler) {
 
         @Override
         public Subscription call(final Observer<T> observer) {
-            return source.subscribe(new ScheduledObserver<T>(observer, scheduler));
+            if (scheduler instanceof ImmediateScheduler) {
+                // do nothing if we request ImmediateScheduler so we don't invoke overhead
+                return source.subscribe(observer);
+            } else {
+                return source.subscribe(new ScheduledObserver<T>(observer, scheduler));
+            }
         }
     }
 
diff --git a/rxjava-core/src/main/java/rx/operators/ScheduledObserver.java b/rxjava-core/src/main/java/rx/operators/ScheduledObserver.java
index 7273a29f5c..c491760a1b 100644
--- a/rxjava-core/src/main/java/rx/operators/ScheduledObserver.java
+++ b/rxjava-core/src/main/java/rx/operators/ScheduledObserver.java
@@ -1,12 +1,12 @@
 /**
  * Copyright 2013 Netflix, Inc.
- *
+ * 
  * Licensed under the Apache License, Version 2.0 (the "License");
  * you may not use this file except in compliance with the License.
  * You may obtain a copy of the License at
- *
+ * 
  * http://www.apache.org/licenses/LICENSE-2.0
- *
+ * 
  * Unless required by applicable law or agreed to in writing, software
  * distributed under the License is distributed on an "AS IS" BASIS,
  * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
@@ -18,18 +18,13 @@
 import rx.Notification;
 import rx.Observer;
 import rx.Scheduler;
+import rx.concurrency.Schedulers;
 import rx.util.functions.Action0;
 
-import java.util.concurrent.ConcurrentLinkedQueue;
-import java.util.concurrent.atomic.AtomicInteger;
-
 /* package */class ScheduledObserver<T> implements Observer<T> {
     private final Observer<T> underlying;
     private final Scheduler scheduler;
 
-    private final ConcurrentLinkedQueue<Notification<T>> queue = new ConcurrentLinkedQueue<Notification<T>>();
-    private final AtomicInteger counter = new AtomicInteger(0);
-
     public ScheduledObserver(Observer<T> underlying, Scheduler scheduler) {
         this.underlying = underlying;
         this.scheduler = scheduler;
@@ -46,47 +41,38 @@ public void onError(final Exception e) {
     }
 
     @Override
-    public void onNext(final T args) {
-        enqueue(new Notification<T>(args));
+    public void onNext(final T v) {
+        enqueue(new Notification<T>(v));
     }
 
-    private void enqueue(Notification<T> notification) {
-        int count = counter.getAndIncrement();
-
-        queue.offer(notification);
+    private void enqueue(final Notification<T> notification) {
 
-        if (count == 0) {
-            processQueue();
-        }
-    }
-
-    private void processQueue() {
-        scheduler.schedule(new Action0() {
+        Schedulers.currentThread().schedule(new Action0() {
             @Override
             public void call() {
-                Notification<T> not = queue.poll();
-
-                switch (not.getKind()) {
-                    case OnNext:
-                        underlying.onNext(not.getValue());
-                        break;
-                    case OnError:
-                        underlying.onError(not.getException());
-                        break;
-                    case OnCompleted:
-                        underlying.onCompleted();
-                        break;
-                    default:
-                        throw new IllegalStateException("Unknown kind of notification " + not);
-
-                }
-
-                int count = counter.decrementAndGet();
-                if (count > 0) {
-                    scheduler.schedule(this);
-                }
 
+                scheduler.schedule(new Action0() {
+                    @Override
+                    public void call() {
+                        switch (notification.getKind()) {
+                        case OnNext:
+                            underlying.onNext(notification.getValue());
+                            break;
+                        case OnError:
+                            underlying.onError(notification.getException());
+                            break;
+                        case OnCompleted:
+                            underlying.onCompleted();
+                            break;
+                        default:
+                            throw new IllegalStateException("Unknown kind of notification " + notification);
+
+                        }
+                    }
+                });
             }
+
         });
-    }
+    };
+
 }