diff --git a/ArduCopter/ArduCopter.pde b/ArduCopter/ArduCopter.pde
index 812a39f64b..7eb63ce35b 100644
--- a/ArduCopter/ArduCopter.pde
+++ b/ArduCopter/ArduCopter.pde
@@ -1800,13 +1800,13 @@ bool set_throttle_mode( uint8_t new_throttle_mode )
 
         case THROTTLE_STABILIZED_RATE:
         case THROTTLE_DIRECT_ALT:
-            controller_desired_alt = current_loc.alt;   // reset controller desired altitude to current altitude
+            controller_desired_alt = get_initial_alt_hold(current_loc.alt, climb_rate);   // reset controller desired altitude to current altitude
             throttle_initialised = true;
             break;
 
         case THROTTLE_HOLD:
         case THROTTLE_AUTO:
-            controller_desired_alt = current_loc.alt;   // reset controller desired altitude to current altitude
+            controller_desired_alt = get_initial_alt_hold(current_loc.alt, climb_rate);   // reset controller desired altitude to current altitude
             set_new_altitude(current_loc.alt);          // by default hold the current altitude
             if ( throttle_mode <= THROTTLE_MANUAL_TILT_COMPENSATED ) {      // reset the alt hold I terms if previous throttle mode was manual
                 reset_throttle_I();
@@ -1818,7 +1818,7 @@ bool set_throttle_mode( uint8_t new_throttle_mode )
         case THROTTLE_LAND:
             set_land_complete(false);   // mark landing as incomplete
             land_detector = 0;          // A counter that goes up if our climb rate stalls out.
-            controller_desired_alt = current_loc.alt;   // reset controller desired altitude to current altitude
+            controller_desired_alt = get_initial_alt_hold(current_loc.alt, climb_rate);   // reset controller desired altitude to current altitude
             // Set target altitude to LAND_START_ALT if we are high, below this altitude the get_throttle_rate_stabilized will take care of setting the next_WP.alt
             if (current_loc.alt >= LAND_START_ALT) {
                 set_new_altitude(LAND_START_ALT);
diff --git a/ArduCopter/Attitude.pde b/ArduCopter/Attitude.pde
index 0c23dc12bf..bf52c20681 100644
--- a/ArduCopter/Attitude.pde
+++ b/ArduCopter/Attitude.pde
@@ -957,6 +957,29 @@ static int32_t get_pilot_desired_direct_alt(int16_t throttle_control)
     return desired_alt;
 }
 
+// get_initial_alt_hold - get new target altitude based on current altitude and climb rate
+static int32_t
+get_initial_alt_hold( int32_t alt_cm, int16_t climb_rate_cms)
+{
+    int32_t target_alt;
+    int32_t linear_distance;      // half the distace we swap between linear and sqrt and the distace we offset sqrt.
+    int32_t linear_velocity;      // the velocity we swap between linear and sqrt.
+
+    linear_velocity = ALT_HOLD_ACCEL_MAX/g.pi_alt_hold.kP();
+
+    if (abs(climb_rate_cms) < linear_velocity) {
+        target_alt = alt_cm + climb_rate_cms/g.pi_alt_hold.kP();
+    } else {
+        linear_distance = ALT_HOLD_ACCEL_MAX/(2*g.pi_alt_hold.kP()*g.pi_alt_hold.kP());
+        if (climb_rate_cms > 0){
+            target_alt = alt_cm + linear_distance + (int32_t)climb_rate_cms*(int32_t)climb_rate_cms/(2*ALT_HOLD_ACCEL_MAX);
+        } else {
+            target_alt = alt_cm - ( linear_distance + (int32_t)climb_rate_cms*(int32_t)climb_rate_cms/(2*ALT_HOLD_ACCEL_MAX) );
+        }
+    }
+    return constrain(target_alt, alt_cm - ALT_HOLD_INIT_MAX_OVERSHOOT, alt_cm + ALT_HOLD_INIT_MAX_OVERSHOOT);
+}
+
 // get_throttle_rate - calculates desired accel required to achieve desired z_target_speed
 // sets accel based throttle controller target
 static void
@@ -1025,19 +1048,19 @@ static void
 get_throttle_althold(int32_t target_alt, int16_t min_climb_rate, int16_t max_climb_rate)
 {
     int32_t alt_error;
-    int16_t desired_rate;
-    int32_t linear_distance;      // the distace we swap between linear and sqrt.
+    float desired_rate;
+    int32_t linear_distance;      // half the distace we swap between linear and sqrt and the distace we offset sqrt.
 
     // calculate altitude error
     alt_error    = target_alt - current_loc.alt;
 
     // check kP to avoid division by zero
     if( g.pi_alt_hold.kP() != 0 ) {
-        linear_distance = 250/(2*g.pi_alt_hold.kP()*g.pi_alt_hold.kP());
+        linear_distance = ALT_HOLD_ACCEL_MAX/(2*g.pi_alt_hold.kP()*g.pi_alt_hold.kP());
         if( alt_error > 2*linear_distance ) {
-            desired_rate = safe_sqrt(2*250*(alt_error-linear_distance));
+            desired_rate = safe_sqrt(2*ALT_HOLD_ACCEL_MAX*(alt_error-linear_distance));
         }else if( alt_error < -2*linear_distance ) {
-            desired_rate = -safe_sqrt(2*250*(-alt_error-linear_distance));
+            desired_rate = -safe_sqrt(2*ALT_HOLD_ACCEL_MAX*(-alt_error-linear_distance));
         }else{
             desired_rate = g.pi_alt_hold.get_p(alt_error);
         }
diff --git a/ArduCopter/config.h b/ArduCopter/config.h
index 36d72552be..b8ceef0e9c 100644
--- a/ArduCopter/config.h
+++ b/ArduCopter/config.h
@@ -1038,6 +1038,15 @@
 #endif
 #define ACCELERATION_MAX_Z  750     // maximum veritcal acceleration in cm/s/s
 
+// max distance in cm above or below current location that will be used for the alt target when transitioning to alt-hold mode
+#ifndef ALT_HOLD_INIT_MAX_OVERSHOOT
+ # define ALT_HOLD_INIT_MAX_OVERSHOOT 200
+#endif
+// the acceleration used to define the distance-velocity curve
+#ifndef ALT_HOLD_ACCEL_MAX
+ # define ALT_HOLD_ACCEL_MAX 250
+#endif
+
 // Throttle Accel control
 #ifndef THROTTLE_ACCEL_P
  # define THROTTLE_ACCEL_P  0.75f