diff --git a/setup.py b/setup.py
index bb9fe2b7..94ebc5d4 100755
--- a/setup.py
+++ b/setup.py
@@ -31,14 +31,14 @@ def run_tests(self):
 install_requires_replacements = {
     'https://github.com/ethereum/pyrlp/tarball/develop#egg=rlp': 'rlp>=0.3.9',
     'https://github.com/ethereum/pydevp2p/tarball/develop#egg=devp2p': 'devp2p>=0.5.2',
-    'https://github.com/ethereum/pyethereum/tarball/develop#egg=ethereum': 'ethereum>=1.0.4',
+    'https://github.com/ethereum/pyethereum/tarball/develop#egg=ethereum': 'ethereum>=1.0.5',
     'https://github.com/ethereum/ethash/tarball/master#egg=pyethash': 'pyethash'}
 
 install_requires = [install_requires_replacements.get(r, r) for r in install_requires]
 
 test_requirements = ['ethereum-serpent>=1.8.1']
 
-version = '1.0.5'  # preserve format, this is read from __init__.py
+version = '1.0.6'  # preserve format, this is read from __init__.py
 
 setup(
     name='pyethapp',