diff --git a/doc/source/whatsnew/v0.19.0.txt b/doc/source/whatsnew/v0.19.0.txt
index 454ffc5e5c685..1e6d8543dc55a 100644
--- a/doc/source/whatsnew/v0.19.0.txt
+++ b/doc/source/whatsnew/v0.19.0.txt
@@ -1576,5 +1576,6 @@ Bug Fixes
 
 - Bug in ``eval()`` where the ``resolvers`` argument would not accept a list (:issue:`14095`)
 - Bugs in ``stack``, ``get_dummies``, ``make_axis_dummies`` which don't preserve categorical dtypes in (multi)indexes (:issue:`13854`)
-- ``PeridIndex`` can now accept ``list`` and ``array`` which contains ``pd.NaT`` (:issue:`13430`)
+- ``PeriodIndex`` can now accept ``list`` and ``array`` which contains ``pd.NaT`` (:issue:`13430`)
 - Bug in ``df.groupby`` where ``.median()`` returns arbitrary values if grouped dataframe contains empty bins (:issue:`13629`)
+- Bug in ``MultiIndex.set_levels`` where illegal level values were still set after raising an error (:issue:`13754`)
diff --git a/pandas/indexes/multi.py b/pandas/indexes/multi.py
index 09c755b2c9792..12a7964f807fd 100644
--- a/pandas/indexes/multi.py
+++ b/pandas/indexes/multi.py
@@ -116,12 +116,22 @@ def __new__(cls, levels=None, labels=None, sortorder=None, names=None,
 
         return result
 
-    def _verify_integrity(self):
+    def _verify_integrity(self, new_labels=None, new_levels=None):
         """Raises ValueError if length of levels and labels don't match or any
-        label would exceed level bounds"""
+        label would exceed level bounds
+
+        Parameters
+        ----------
+        new_labels : optional list
+            Labels to check for validity. Defaults to current labels.
+        new_levels : optional list
+            Levels to check for validity. Defaults to current levels.
+        """
         # NOTE: Currently does not check, among other things, that cached
         # nlevels matches nor that sortorder matches actually sortorder.
-        labels, levels = self.labels, self.levels
+        labels = new_labels or self.labels
+        levels = new_levels or self.levels
+
         if len(levels) != len(labels):
             raise ValueError("Length of levels and labels must match. NOTE:"
                              " this index is in an inconsistent state.")
@@ -162,6 +172,9 @@ def _set_levels(self, levels, level=None, copy=False, validate=True,
                 new_levels[l] = _ensure_index(v, copy=copy)._shallow_copy()
             new_levels = FrozenList(new_levels)
 
+        if verify_integrity:
+            self._verify_integrity(new_levels=new_levels)
+
         names = self.names
         self._levels = new_levels
         if any(names):
@@ -170,9 +183,6 @@ def _set_levels(self, levels, level=None, copy=False, validate=True,
         self._tuples = None
         self._reset_cache()
 
-        if verify_integrity:
-            self._verify_integrity()
-
     def set_levels(self, levels, level=None, inplace=False,
                    verify_integrity=True):
         """
@@ -268,13 +278,13 @@ def _set_labels(self, labels, level=None, copy=False, validate=True,
                     lab, lev, copy=copy)._shallow_copy()
             new_labels = FrozenList(new_labels)
 
+        if verify_integrity:
+            self._verify_integrity(new_labels=new_labels)
+
         self._labels = new_labels
         self._tuples = None
         self._reset_cache()
 
-        if verify_integrity:
-            self._verify_integrity()
-
     def set_labels(self, labels, level=None, inplace=False,
                    verify_integrity=True):
         """
diff --git a/pandas/tests/indexes/test_multi.py b/pandas/tests/indexes/test_multi.py
index 5248f0775d22f..76211c9b3eee4 100644
--- a/pandas/tests/indexes/test_multi.py
+++ b/pandas/tests/indexes/test_multi.py
@@ -154,7 +154,7 @@ def assert_matching(actual, expected):
             # as much as possible
             self.assertEqual(len(actual), len(expected))
             for act, exp in zip(actual, expected):
-                act = np.asarray(act)
+                act = np.asarray(act, dtype=np.object_)
                 exp = np.asarray(exp, dtype=np.object_)
                 tm.assert_numpy_array_equal(act, exp)
 
@@ -204,6 +204,25 @@ def assert_matching(actual, expected):
         assert_matching(ind2.levels, new_levels)
         assert_matching(self.index.levels, levels)
 
+        # illegal level changing should not change levels
+        # GH 13754
+        original_index = self.index.copy()
+        with assertRaisesRegexp(ValueError, "^On"):
+            self.index.set_levels(['c'], level=0, inplace=True)
+        assert_matching(self.index.levels, original_index.levels)
+
+        with assertRaisesRegexp(ValueError, "^On"):
+            self.index.set_labels([0, 1, 2, 3, 4, 5], level=0, inplace=True)
+        assert_matching(self.index.labels, original_index.labels)
+
+        with assertRaisesRegexp(TypeError, "^Levels"):
+            self.index.set_levels('c', level=0, inplace=True)
+        assert_matching(self.index.levels, original_index.levels)
+
+        with assertRaisesRegexp(TypeError, "^Labels"):
+            self.index.set_labels(1, level=0, inplace=True)
+        assert_matching(self.index.labels, original_index.labels)
+
     def test_set_labels(self):
         # side note - you probably wouldn't want to use levels and labels
         # directly like this - but it is possible.