diff -rupN a/src/options.c b/src/options.c 
--- a/options.c	2013-01-22 11:38:30.000000000 +0100
+++ b/src/options.c	2013-07-15 09:45:28.000000000 +0200
@@ -655,11 +655,15 @@ int ssh_options_set(ssh_session session,
         return -1;
       } else {
         SAFE_FREE(session->ProxyCommand);
-        q = strdup(value);
-        if (q == NULL) {
-            return -1;
+		/* Setting the command to 'none' disables this option. */
+		rc = strcasecmp(value, "none");
+		if (rc != 0) {
+			q = strdup(value);
+			if (q == NULL) {
+				return -1;
+			}
+			session->ProxyCommand = q;
         }
-        session->ProxyCommand = q;
       }
       break;
     default:
--- a/tests/unittests/torture_options.c.orig	2013-07-25 22:06:19.016024956 +0200
+++ b/tests/unittests/torture_options.c	2013-07-25 22:11:28.941507282 +0200
@@ -119,6 +119,24 @@
     assert_string_equal(session->identity->root->next->data, "identity1");
 }
 
+static void torture_options_proxycommand(void **state) {
+    ssh_session session = *state;
+    int rc;
+
+    /* Enable ProxyCommand */
+    rc = ssh_options_set(session, SSH_OPTIONS_PROXYCOMMAND, "ssh -q -A -X -W %h:%p JUMPHOST");
+    assert_int_equal(rc, 0);
+
+    assert_string_equal(session->opts.ProxyCommand, "ssh -q -A -X -W %h:%p JUMPHOST");
+
+    /* Disable ProxyCommand */
+    rc = ssh_options_set(session, SSH_OPTIONS_PROXYCOMMAND, "none");
+    assert_int_equal(rc, 0);
+
+    assert_null(session->opts.ProxyCommand);
+}
+
+
 int torture_run_tests(void) {
     int rc;
     const UnitTest tests[] = {