diff --git a/doc/whats-new.rst b/doc/whats-new.rst
index 7fdb1f4d836..b878eb161a9 100644
--- a/doc/whats-new.rst
+++ b/doc/whats-new.rst
@@ -135,6 +135,9 @@ Bug fixes
   objects with data stored as ``dask`` arrays (:issue:`1529`).
   By `Joe Hamman <https://github.com/jhamman>`_.
 
+- ``:py:meth:`~xarray.Dataset.__init__` raises a ``MergeError`` if an
+  coordinate shares a name with a dimension but is comprised of arbitrary
+  dimensions(:issue:`1120`).
 - :py:func:`~xarray.open_rasterio` method now skips rasterio.crs -attribute if
   it is none.
   By `Leevi Annala <https://github.com/leevei>`_.
diff --git a/xarray/core/merge.py b/xarray/core/merge.py
index d156d0d78ef..f32c7bd82a4 100644
--- a/xarray/core/merge.py
+++ b/xarray/core/merge.py
@@ -365,6 +365,20 @@ def merge_data_and_coords(data, coords, compat='broadcast_equals',
     return merge_core(objs, compat, join, explicit_coords=explicit_coords)
 
 
+def assert_valid_explicit_coords(variables, dims, explicit_coords):
+    """Validate explicit coordinate names/dims.
+
+    Raise a MergeError if an explicit coord shares a name with a dimension
+    but is comprised of arbitrary dimensions.
+    """
+    for coord_name in explicit_coords:
+        if coord_name in dims and variables[coord_name].dims != (coord_name,):
+            raise MergeError(
+                'coordinate %s shares a name with a dataset dimension, but is '
+                'not a 1D variable along that dimension. This is disallowed '
+                'by the xarray data model.' % coord_name)
+
+
 def merge_core(objs,
                compat='broadcast_equals',
                join='outer',
@@ -414,15 +428,16 @@ def merge_core(objs,
 
     coord_names, noncoord_names = determine_coords(coerced)
 
-    if explicit_coords is not None:
-        coord_names.update(explicit_coords)
-
     priority_vars = _get_priority_vars(aligned, priority_arg, compat=compat)
     variables = merge_variables(expanded, priority_vars, compat=compat)
     assert_unique_multiindex_level_names(variables)
 
     dims = calculate_dimensions(variables)
 
+    if explicit_coords is not None:
+        assert_valid_explicit_coords(variables, dims, explicit_coords)
+        coord_names.update(explicit_coords)
+
     for dim, size in dims.items():
         if dim in variables:
             coord_names.add(dim)
diff --git a/xarray/tests/test_dataset.py b/xarray/tests/test_dataset.py
index b17aab47c12..2e8212d8685 100644
--- a/xarray/tests/test_dataset.py
+++ b/xarray/tests/test_dataset.py
@@ -246,6 +246,12 @@ def test_constructor(self):
         actual = Dataset({'z': expected['z']})
         self.assertDatasetIdentical(expected, actual)
 
+    def test_constructor_invalid_dims(self):
+        # regression for GH1120
+        with self.assertRaises(MergeError):
+            Dataset(data_vars=dict(v=('y', [1, 2, 3, 4])),
+                    coords=dict(y=DataArray([.1, .2, .3, .4], dims='x')))
+
     def test_constructor_1d(self):
         expected = Dataset({'x': (['x'], 5.0 + np.arange(5))})
         actual = Dataset({'x': 5.0 + np.arange(5)})