diff --git a/flow/options.flow.js b/flow/options.flow.js
index 6056e6ddc..94b0c4a6a 100644
--- a/flow/options.flow.js
+++ b/flow/options.flow.js
@@ -18,6 +18,25 @@ declare type Options = {
   shouldProxy?: boolean
 }
 
+declare type NormalizedOptions = {
+  attachToDocument?: boolean,
+  propsData?: Object,
+  mocks: Object,
+  methods: { [key: string]: Function },
+  slots?: SlotsObject,
+  scopedSlots?: { [key: string]: string | Function },
+  localVue?: Component,
+  provide?: Object | Function,
+  stubs: { [name: string]: Component | true | string } | boolean,
+  context?: Object,
+  attrs?: { [key: string]: string },
+  listeners?: { [key: string]: Function | Array<Function> },
+  parentComponent?: Object,
+  logModifiedComponents?: boolean,
+  sync: boolean,
+  shouldProxy?: boolean
+}
+
 declare type SlotValue = Component | string | Array<Component | string>
 
 declare type SlotsObject = { [name: string]: SlotValue }
diff --git a/package.json b/package.json
index 6c501aaa2..540112fd7 100644
--- a/package.json
+++ b/package.json
@@ -68,12 +68,12 @@
     "sinon-chai": "^2.10.0",
     "typescript": "^3.0.1",
     "vee-validate": "^2.1.3",
-    "vue": "2.5.21",
+    "vue": "^2.5.22",
     "vue-class-component": "^6.1.2",
     "vue-loader": "^13.6.2",
     "vue-router": "^3.0.1",
-    "vue-server-renderer": "2.5.21",
-    "vue-template-compiler": "2.5.21",
+    "vue-server-renderer": "^2.5.22",
+    "vue-template-compiler": "^2.5.22",
     "vuepress": "^0.14.2",
     "vuepress-theme-vue": "^1.0.3",
     "vuex": "^3.0.1",
diff --git a/packages/create-instance/create-instance.js b/packages/create-instance/create-instance.js
index b0869002b..bc859ce9f 100644
--- a/packages/create-instance/create-instance.js
+++ b/packages/create-instance/create-instance.js
@@ -41,7 +41,7 @@ function createChildren(vm, h, { slots, context }) {
 
 export default function createInstance(
   component: Component,
-  options: Options,
+  options: NormalizedOptions,
   _Vue: Component
 ): Component {
   const componentOptions = isConstructor(component)
diff --git a/packages/shared/merge-options.js b/packages/shared/merge-options.js
index 6ad19f2aa..b9f0eb507 100644
--- a/packages/shared/merge-options.js
+++ b/packages/shared/merge-options.js
@@ -19,16 +19,27 @@ function getOption(option, config?: Object): any {
   }
 }
 
-export function mergeOptions(options: Options, config: Config): Options {
+function getStubs(stubs, configStubs): Object {
+  const normalizedStubs = normalizeStubs(stubs)
+  const normalizedConfigStubs = normalizeStubs(configStubs)
+  return getOption(normalizedStubs, normalizedConfigStubs)
+}
+
+export function mergeOptions(
+  options: Options,
+  config: Config
+): NormalizedOptions {
   const mocks = (getOption(options.mocks, config.mocks): Object)
   const methods = (getOption(options.methods, config.methods): {
     [key: string]: Function
   })
   const provide = (getOption(options.provide, config.provide): Object)
+  const stubs = (getStubs(options.stubs, config.stubs): Object)
+  // $FlowIgnore
   return {
     ...options,
     provide: normalizeProvide(provide),
-    stubs: getOption(normalizeStubs(options.stubs), config.stubs),
+    stubs,
     mocks,
     methods,
     sync: !!(options.sync || options.sync === undefined)
diff --git a/packages/test-utils/src/config.js b/packages/test-utils/src/config.js
index 70734d99c..fbd002dbd 100644
--- a/packages/test-utils/src/config.js
+++ b/packages/test-utils/src/config.js
@@ -1,11 +1,5 @@
-import TransitionStub from './components/TransitionStub'
-import TransitionGroupStub from './components/TransitionGroupStub'
-
 export default {
-  stubs: {
-    transition: TransitionStub,
-    'transition-group': TransitionGroupStub
-  },
+  stubs: {},
   mocks: {},
   methods: {},
   provide: {},
diff --git a/packages/test-utils/src/mount.js b/packages/test-utils/src/mount.js
index 458aead11..3ef6a5625 100644
--- a/packages/test-utils/src/mount.js
+++ b/packages/test-utils/src/mount.js
@@ -1,7 +1,4 @@
-// @flow
-
 import Vue from 'vue'
-import VueWrapper from './vue-wrapper'
 import createInstance from 'create-instance'
 import createElement from './create-element'
 import { throwIfInstancesThrew, addGlobalErrorHandler } from './error'
@@ -14,6 +11,8 @@ import { warn } from 'shared/util'
 import semver from 'semver'
 import { COMPAT_SYNC_MODE } from 'shared/consts'
 import { validateOptions } from 'shared/validate-options'
+import TransitionGroupStub from './components/TransitionGroupStub'
+import TransitionStub from './components/TransitionStub'
 
 Vue.config.productionTip = false
 Vue.config.devtools = false
@@ -45,10 +44,27 @@ function getSyncOption(syncOption) {
   return true
 }
 
-export default function mount(
-  component: Component,
-  options: Options = {}
-): VueWrapper | Wrapper {
+function addTransitionStubs(options) {
+  if (config.stubs === false) {
+    return
+  }
+  if (
+    options.stubs &&
+    options.stubs.transition !== false &&
+    !options.stubs.transition
+  ) {
+    options.stubs.transition = TransitionStub
+  }
+  if (
+    options.stubs &&
+    options.stubs['transition-group'] !== false &&
+    !options.stubs['transition-group']
+  ) {
+    options.stubs['transition-group'] = TransitionGroupStub
+  }
+}
+
+export default function mount(component, options = {}) {
   warnIfNoWindow()
 
   addGlobalErrorHandler(Vue)
@@ -56,9 +72,17 @@ export default function mount(
   const _Vue = createLocalVue(options.localVue)
 
   const mergedOptions = mergeOptions(options, config)
+  const sync = getSyncOption(mergedOptions.sync)
 
   validateOptions(mergedOptions, component)
 
+  // Stub transition and transition-group if in compat sync mode to keep old
+  // behavior
+  // TODO: Remove when compat sync mode is removed
+  if (sync === COMPAT_SYNC_MODE) {
+    addTransitionStubs(mergedOptions)
+  }
+
   const parentVm = createInstance(component, mergedOptions, _Vue)
 
   const el = options.attachToDocument ? createElement() : undefined
@@ -67,7 +91,6 @@ export default function mount(
   component._Ctor = {}
 
   throwIfInstancesThrew(vm)
-  const sync = getSyncOption(mergedOptions.sync)
 
   const wrapperOptions = {
     attachedToDocument: !!mergedOptions.attachToDocument,
diff --git a/test/resources/components/component-with-transition-group.vue b/test/resources/components/component-with-transition-group.vue
index 932aeef6e..0c1163b4e 100644
--- a/test/resources/components/component-with-transition-group.vue
+++ b/test/resources/components/component-with-transition-group.vue
@@ -1,7 +1,7 @@
 <template>
   <transition-group>
-    <div>{{ a }}</div>
-    <div></div>
+    <div key="123">{{ a }}</div>
+    <div key="124"></div>
   </transition-group>
 </template>
 
diff --git a/test/specs/components/TransitionGroupStub.spec.js b/test/specs/components/TransitionGroupStub.spec.js
index 36097c2df..e3fb3f673 100644
--- a/test/specs/components/TransitionGroupStub.spec.js
+++ b/test/specs/components/TransitionGroupStub.spec.js
@@ -1,6 +1,7 @@
 import ComponentWithTransitionGroup from '~resources/components/component-with-transition-group.vue'
 import { TransitionGroupStub } from '~vue/test-utils'
-import { describeWithShallowAndMount } from '~resources/utils'
+import { describeWithShallowAndMount, vueVersion } from '~resources/utils'
+import { itDoNotRunIf } from 'conditional-specs'
 
 describeWithShallowAndMount('TransitionGroupStub', mountingMethod => {
   it('update synchronously when used as stubs for Transition', () => {
@@ -14,6 +15,18 @@ describeWithShallowAndMount('TransitionGroupStub', mountingMethod => {
     expect(wrapper.text()).contains('b')
   })
 
+  itDoNotRunIf(
+    vueVersion < 2.5,
+    'does not stub TransitionGroup, but applies synchronously in Vue > 2.5.18',
+    () => {
+      const wrapper = mountingMethod(ComponentWithTransitionGroup)
+      expect(wrapper.find(TransitionGroupStub).exists()).to.equal(false)
+      expect(wrapper.text()).contains('a')
+      wrapper.setData({ a: 'b' })
+      expect(wrapper.text()).contains('b')
+    }
+  )
+
   it('updates watchers', () => {
     const TestComponent = {
       data: () => ({
diff --git a/test/specs/components/TransitionStub.spec.js b/test/specs/components/TransitionStub.spec.js
index 17594edab..ced8a6514 100644
--- a/test/specs/components/TransitionStub.spec.js
+++ b/test/specs/components/TransitionStub.spec.js
@@ -1,6 +1,7 @@
 import ComponentWithTransition from '~resources/components/component-with-transition.vue'
-import { describeWithShallowAndMount } from '~resources/utils'
+import { describeWithShallowAndMount, vueVersion } from '~resources/utils'
 import { TransitionStub } from '~vue/test-utils'
+import { itDoNotRunIf } from 'conditional-specs'
 
 describeWithShallowAndMount('TransitionStub', mountingMethod => {
   let consoleError
@@ -24,6 +25,18 @@ describeWithShallowAndMount('TransitionStub', mountingMethod => {
     expect(wrapper.text()).contains('b')
   })
 
+  itDoNotRunIf(
+    vueVersion < 2.5,
+    'does not stub Transition, but applies synchronously in Vue > 2.5.18',
+    () => {
+      const wrapper = mountingMethod(ComponentWithTransition)
+      expect(wrapper.find(TransitionStub).exists()).to.equal(false)
+      expect(wrapper.text()).contains('a')
+      wrapper.setData({ a: 'b' })
+      expect(wrapper.text()).contains('b')
+    }
+  )
+
   it('does not add v-leave class to children', () => {
     const TestComponent = {
       template: `
diff --git a/test/specs/config.spec.js b/test/specs/config.spec.js
index 4261aa198..9f66a28a7 100644
--- a/test/specs/config.spec.js
+++ b/test/specs/config.spec.js
@@ -122,20 +122,6 @@ describeWithShallowAndMount('config', mountingMethod => {
     expect(wrapper.contains(TransitionStub)).to.equal(false)
   })
 
-  it("doesn't stub transition when config.stubs is set to a string", () => {
-    config.stubs = 'a string'
-    const testComponent = {
-      template: `
-        <div>
-          <transition-group><p /><p /></transition-group>
-        </div>
-      `
-    }
-    const wrapper = mountingMethod(testComponent)
-    expect(wrapper.contains(TransitionGroupStub)).to.equal(false)
-    expect(wrapper.contains(TransitionStub)).to.equal(false)
-  })
-
   it("doesn't throw Vue warning when silent is set to true", () => {
     config.silent = true
     const localVue = createLocalVue()
diff --git a/yarn.lock b/yarn.lock
index c6b21eee1..bfc6a85d8 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -9823,10 +9823,9 @@ vue-router@^3.0.1:
   version "3.0.1"
   resolved "https://registry.yarnpkg.com/vue-router/-/vue-router-3.0.1.tgz#d9b05ad9c7420ba0f626d6500d693e60092cc1e9"
 
-vue-server-renderer@2.5.21:
-  version "2.5.21"
-  resolved "https://registry.yarnpkg.com/vue-server-renderer/-/vue-server-renderer-2.5.21.tgz#7c2b611d2e8558359cdb84dcd3080845c07121b4"
-  integrity sha512-bAkOYZ5DnmQKv3RboNbmCB4LReF2tIE20EgUeWrz/87aVkpMihf3FVK+8DT45nyN4k9iSQOhsyem49fq++cF8w==
+vue-server-renderer@^2.5.16:
+  version "2.5.16"
+  resolved "https://registry.yarnpkg.com/vue-server-renderer/-/vue-server-renderer-2.5.16.tgz#279ef8e37e502a0de3a9ae30758cc04a472eaac0"
   dependencies:
     chalk "^1.1.3"
     hash-sum "^1.0.2"
@@ -9837,9 +9836,10 @@ vue-server-renderer@2.5.21:
     serialize-javascript "^1.3.0"
     source-map "0.5.6"
 
-vue-server-renderer@^2.5.16:
-  version "2.5.16"
-  resolved "https://registry.yarnpkg.com/vue-server-renderer/-/vue-server-renderer-2.5.16.tgz#279ef8e37e502a0de3a9ae30758cc04a472eaac0"
+vue-server-renderer@^2.5.22:
+  version "2.5.22"
+  resolved "https://registry.yarnpkg.com/vue-server-renderer/-/vue-server-renderer-2.5.22.tgz#f119efef289c865adc22fda0ae7595299bedbdcf"
+  integrity sha512-PQ0PubA6b2MyZud/gepWeiUuDFSbRfa6h1qYINcbwXRr4Z3yLTHprEQuFnWikdkTkZpeLFYUqZrDxPbDcJ71mA==
   dependencies:
     chalk "^1.1.3"
     hash-sum "^1.0.2"
@@ -9864,17 +9864,17 @@ vue-style-loader@^4.1.0:
     hash-sum "^1.0.2"
     loader-utils "^1.0.2"
 
-vue-template-compiler@2.5.21:
-  version "2.5.21"
-  resolved "https://registry.yarnpkg.com/vue-template-compiler/-/vue-template-compiler-2.5.21.tgz#a57ceb903177e8f643560a8d639a0f8db647054a"
-  integrity sha512-Vmk5Cv7UcmI99B9nXJEkaK262IQNnHp5rJYo+EwYpe2epTAXqcVyExhV6pk8jTkxQK2vRc8v8KmZBAwdmUZvvw==
+vue-template-compiler@^2.5.16:
+  version "2.5.16"
+  resolved "https://registry.yarnpkg.com/vue-template-compiler/-/vue-template-compiler-2.5.16.tgz#93b48570e56c720cdf3f051cc15287c26fbd04cb"
   dependencies:
     de-indent "^1.0.2"
     he "^1.1.0"
 
-vue-template-compiler@^2.5.16:
-  version "2.5.16"
-  resolved "https://registry.yarnpkg.com/vue-template-compiler/-/vue-template-compiler-2.5.16.tgz#93b48570e56c720cdf3f051cc15287c26fbd04cb"
+vue-template-compiler@^2.5.22:
+  version "2.5.22"
+  resolved "https://registry.yarnpkg.com/vue-template-compiler/-/vue-template-compiler-2.5.22.tgz#c3d3c02c65f1908205c4fbd3b0ef579e51239955"
+  integrity sha512-1VTw/NPTUeHNiwhkq6NkFzO7gYLjFCueBN0FX8NEiQIemd5EUMQ5hxrF7O0zCPo5tae+U9S/scETPea+hIz8Eg==
   dependencies:
     de-indent "^1.0.2"
     he "^1.1.0"
@@ -9883,15 +9883,15 @@ vue-template-es2015-compiler@^1.6.0:
   version "1.6.0"
   resolved "https://registry.yarnpkg.com/vue-template-es2015-compiler/-/vue-template-es2015-compiler-1.6.0.tgz#dc42697133302ce3017524356a6c61b7b69b4a18"
 
-vue@2.5.21:
-  version "2.5.21"
-  resolved "https://registry.yarnpkg.com/vue/-/vue-2.5.21.tgz#3d33dcd03bb813912ce894a8303ab553699c4a85"
-  integrity sha512-Aejvyyfhn0zjVeLvXd70h4hrE4zZDx1wfZqia6ekkobLmUZ+vNFQer53B4fu0EjWBSiqApxPejzkO1Znt3joxQ==
-
 vue@^2.5.16:
   version "2.5.16"
   resolved "https://registry.yarnpkg.com/vue/-/vue-2.5.16.tgz#07edb75e8412aaeed871ebafa99f4672584a0085"
 
+vue@^2.5.22:
+  version "2.5.22"
+  resolved "https://registry.yarnpkg.com/vue/-/vue-2.5.22.tgz#3bf88041af08b8539c37b268b70ca79245e9cc30"
+  integrity sha512-pxY3ZHlXNJMFQbkjEgGVMaMMkSV1ONpz+4qB55kZuJzyJOhn6MSy/YZdzhdnumegNzVTL/Dn3Pp4UrVBYt1j/g==
+
 vuepress-html-webpack-plugin@^3.2.0:
   version "3.2.0"
   resolved "https://registry.yarnpkg.com/vuepress-html-webpack-plugin/-/vuepress-html-webpack-plugin-3.2.0.tgz#219be272ad510faa8750d2d4e70fd028bfd1c16e"