diff --git a/src/reconciler.js b/src/reconciler.js
index 9c3d8da..4b93552 100644
--- a/src/reconciler.js
+++ b/src/reconciler.js
@@ -10,16 +10,43 @@ export function render(element, container) {
 
 function reconcile(parentDom, instance, element) {
   if (instance == null) {
+    // Create instance
     const newInstance = instantiate(element);
     parentDom.appendChild(newInstance.dom);
     return newInstance;
+  } else if (element == null) {
+    // Remove instance
+    parentDom.removeChild(instance.dom);
+    return null;
+  } else if (instance.element.type === element.type) {
+    // Update instance
+    updateDomProperties(instance.dom, instance.element.props, element.props);
+    instance.childInstances = reconcileChildren(instance, element);
+    instance.element = element;
+    return instance;
   } else {
+    // Replace instance
     const newInstance = instantiate(element);
     parentDom.replaceChild(newInstance.dom, instance.dom);
     return newInstance;
   }
 }
 
+function reconcileChildren(instance, element) {
+  const dom = instance.dom;
+  const childInstances = instance.childInstances;
+  const nextChildElements = element.props.children || [];
+  const newChildInstances = [];
+  const count = Math.max(childInstances.length, nextChildElements.length);
+  for (let i = 0; i < count; i++) {
+    const childInstance = childInstances[i];
+    const childElement = nextChildElements[i];
+    const newChildInstance = reconcile(dom, childInstance, childElement);
+    newChildInstances.push(newChildInstance);
+  }
+  return newChildInstances.filter(instance => instance != null);
+}
+
 function instantiate(element) {
   const { type, props } = element;
 
diff --git a/test/03.reconciliation.test.js b/test/03.reconciliation.test.js
new file mode 100644
index 0000000..f6ddb7f
--- /dev/null
+++ b/test/03.reconciliation.test.js
@@ -0,0 +1,43 @@
+import test from "ava";
+import browserEnv from "browser-env";
+/** @jsx createElement */
+import { render, createElement } from "../src/didact";
+
+// Create document global var
+browserEnv(["document"]);
+
+test.beforeEach(t => {
+  let root = document.getElementById("root");
+  if (!root) {
+    root = document.createElement("div");
+    root.id = "root";
+    document.body.appendChild(root);
+  }
+  t.context.root = root;
+});
+
+test("replace div to span", t => {
+  const root = t.context.root;
+  let element = <div>Foo</div>;
+  render(element, root);
+  t.is(root.innerHTML, "<div>Foo</div>");
+  const prevChild = root.firstElementChild;
+  element = <span>Foo</span>;
+  render(element, root);
+  t.is(root.innerHTML, "<span>Foo</span>");
+  const nextChild = root.firstElementChild;
+  t.not(prevChild, nextChild);
+});
+
+test("reuse div", t => {
+  const root = t.context.root;
+  let element = <div>Foo</div>;
+  render(element, root);
+  t.is(root.innerHTML, "<div>Foo</div>");
+  const prevChild = root.firstElementChild;
+  element = <div>Bar</div>;
+  render(element, root);
+  t.is(root.innerHTML, "<div>Bar</div>");
+  const nextChild = root.firstElementChild;
+  t.is(prevChild, nextChild);
+});