diff --git a/xray/core/groupby.py b/xray/core/groupby.py
index d650f313059..26fae1a4f54 100644
--- a/xray/core/groupby.py
+++ b/xray/core/groupby.py
@@ -242,11 +242,17 @@ def apply(self, func, shortcut=False, **kwargs):
         applied : DataArray
             The result of splitting, applying and combining this array.
         """
+        def maybe_wrap_array(arr, f):
+            # in case func lost array's metadata
+            if isinstance(f, np.ndarray) and f.shape == arr.shape:
+                return arr.__array_wrap__(f)
+            else:
+                return f
         if shortcut:
             grouped = self._iter_grouped_shortcut()
         else:
             grouped = self._iter_grouped()
-        applied = (func(arr, **kwargs) for arr in grouped)
+        applied = (maybe_wrap_array(arr, func(arr, **kwargs)) for arr in grouped)
         return self._concat(applied, shortcut=shortcut)
 
     def _concat(self, applied, shortcut=False):
diff --git a/xray/test/test_dataarray.py b/xray/test/test_dataarray.py
index ce7932c8fbe..6c8b4413359 100644
--- a/xray/test/test_dataarray.py
+++ b/xray/test/test_dataarray.py
@@ -862,6 +862,26 @@ def center(x):
         expected_centered = expected_ds['foo']
         self.assertDataArrayAllClose(expected_centered, grouped.apply(center))
 
+    def test_groupby_apply_ndarray(self):
+        # regression test for #326
+        array = self.make_groupby_example_array()
+        grouped = array.groupby('abc')
+        actual = grouped.apply(np.asarray)
+        self.assertDataArrayEqual(array, actual)
+
+    def test_groupby_apply_changes_metadata(self):
+        def change_metadata(x):
+            x.coords['x'] = x.coords['x'] * 2
+            x.attrs['fruit'] = 'lemon'
+            return x
+
+        array = self.make_groupby_example_array()
+        grouped = array.groupby('abc')
+        actual = grouped.apply(change_metadata)
+        expected = array.copy()
+        expected = change_metadata(expected)
+        self.assertDataArrayEqual(expected, actual)
+
     def test_groupby_math(self):
         array = self.make_groupby_example_array()
         for squeeze in [True, False]: