diff --git a/doc/source/whatsnew/v0.15.2.txt b/doc/source/whatsnew/v0.15.2.txt
index b1fa6dbed442d..7041352971407 100644
--- a/doc/source/whatsnew/v0.15.2.txt
+++ b/doc/source/whatsnew/v0.15.2.txt
@@ -27,6 +27,7 @@ API changes
 Enhancements
 ~~~~~~~~~~~~
 
+- StataReader: Properly support sorting categorical variables read from stata files.
 
 .. _whatsnew_0152.performance:
 
diff --git a/pandas/io/stata.py b/pandas/io/stata.py
index c2542594861c4..36ac705e4e3ed 100644
--- a/pandas/io/stata.py
+++ b/pandas/io/stata.py
@@ -1139,12 +1139,17 @@ def data(self, convert_dates=True, convert_categoricals=True, index=None,
             )[0]
             for i in cols:
                 col = data.columns[i]
-                labeled_data = np.copy(data[col])
-                labeled_data = labeled_data.astype(object)
-                for k, v in compat.iteritems(
-                        self.value_label_dict[self.lbllist[i]]):
-                    labeled_data[(data[col] == k).values] = v
-                data[col] = Categorical.from_array(labeled_data)
+                codes = np.nan_to_num(data[col])
+                codes = codes.astype(int)
+                codes = codes-1
+                categories = []
+                labeldict = self.value_label_dict[self.lbllist[i]]
+                for j in range(max(labeldict.keys())):
+                    try:
+                        categories.append(labeldict[j+1])
+                    except:
+                        categories.append(j+1)
+                data[col] = Categorical.from_codes(codes, categories, ordered=True)
 
         if not preserve_dtypes:
             retyped_data = []
diff --git a/pandas/io/tests/data/stata10_117.dta b/pandas/io/tests/data/stata10_117.dta
new file mode 100644
index 0000000000000..79dfffd94483f
Binary files /dev/null and b/pandas/io/tests/data/stata10_117.dta differ
diff --git a/pandas/io/tests/test_stata.py b/pandas/io/tests/test_stata.py
index 2cb7809166be5..10df5cc91558e 100644
--- a/pandas/io/tests/test_stata.py
+++ b/pandas/io/tests/test_stata.py
@@ -13,6 +13,7 @@
 
 import pandas as pd
 from pandas.compat import iterkeys
+from pandas.core.categorical import Categorical
 from pandas.core.frame import DataFrame, Series
 from pandas.io.parsers import read_csv
 from pandas.io.stata import (read_stata, StataReader, InvalidColumnName,
@@ -81,6 +82,8 @@ def setUp(self):
         self.dta18_115 = os.path.join(self.dirpath, 'stata9_115.dta')
         self.dta18_117 = os.path.join(self.dirpath, 'stata9_117.dta')
 
+        self.dta19_117 = os.path.join(self.dirpath, 'stata10_117.dta')
+
 
     def read_dta(self, file):
         # Legacy default reader configuration
@@ -744,6 +747,12 @@ def test_drop_column(self):
             columns = ['byte_', 'int_', 'long_', 'not_found']
             read_stata(self.dta15_117, convert_dates=True, columns=columns)
 
+    def test_categorical_sorting(self):
+        dataset = read_stata(self.dta19_117)
+        dataset = dataset.sort("srh")
+        expected = Categorical.from_codes(codes=[-1, -1, 0, 1, 1, 1, 2, 2, 3, 4], categories=["Poor", "Fair", "Good", "Very good", "Excellent"])
+        tm.assert_equal(True, (np.asarray(expected)==np.asarray(dataset["srh"])).all())
+
 if __name__ == '__main__':
     nose.runmodule(argv=[__file__, '-vvs', '-x', '--pdb', '--pdb-failure'],
                    exit=False)