diff --git a/compose/config/config.py b/compose/config/config.py
index c87d73bb8..c342abc56 100644
--- a/compose/config/config.py
+++ b/compose/config/config.py
@@ -714,29 +714,24 @@ def merge_service_dicts(base, override, version):
 
     if version == V1:
         legacy_v1_merge_image_or_build(md, base, override)
-    else:
-        merge_build(md, base, override)
+    elif md.needs_merge('build'):
+        md['build'] = merge_build(md, base, override)
 
     return dict(md)
 
 
 def merge_build(output, base, override):
-    build = {}
+    def to_dict(service):
+        build_config = service.get('build', {})
+        if isinstance(build_config, six.string_types):
+            return {'context': build_config}
+        return build_config
 
-    if 'build' in base:
-        if isinstance(base['build'], six.string_types):
-            build['context'] = base['build']
-        else:
-            build.update(base['build'])
-
-    if 'build' in override:
-        if isinstance(override['build'], six.string_types):
-            build['context'] = override['build']
-        else:
-            build.update(override['build'])
-
-    if build:
-        output['build'] = build
+    md = MergeDict(to_dict(base), to_dict(override))
+    md.merge_scalar('context')
+    md.merge_scalar('dockerfile')
+    md.merge_mapping('args', parse_build_arguments)
+    return dict(md)
 
 
 def legacy_v1_merge_image_or_build(output, base, override):
diff --git a/tests/unit/config/config_test.py b/tests/unit/config/config_test.py
index e545aba73..e04568457 100644
--- a/tests/unit/config/config_test.py
+++ b/tests/unit/config/config_test.py
@@ -1079,6 +1079,39 @@ class ConfigTest(unittest.TestCase):
             'extends': {'service': 'foo'}
         }
 
+    def test_merge_build_args(self):
+        base = {
+            'build': {
+                'context': '.',
+                'args': {
+                    'ONE': '1',
+                    'TWO': '2',
+                },
+            }
+        }
+        override = {
+            'build': {
+                'args': {
+                    'TWO': 'dos',
+                    'THREE': '3',
+                },
+            }
+        }
+        actual = config.merge_service_dicts(
+            base,
+            override,
+            DEFAULT_VERSION)
+        assert actual == {
+            'build': {
+                'context': '.',
+                'args': {
+                    'ONE': '1',
+                    'TWO': 'dos',
+                    'THREE': '3',
+                },
+            }
+        }
+
     def test_external_volume_config(self):
         config_details = build_config_details({
             'version': '2',