diff --git a/lib/db/upgrade.php b/lib/db/upgrade.php
index 9650b7fff17..49376288a78 100644
--- a/lib/db/upgrade.php
+++ b/lib/db/upgrade.php
@@ -2919,5 +2919,13 @@ function xmldb_main_upgrade($oldversion) {
         upgrade_main_savepoint(true, 2014011000.01);
     }
 
+    if ($oldversion < 2014011701.00) {
+        // Fix gradebook sortorder duplicates.
+        upgrade_grade_item_fix_sortorder();
+
+        // Main savepoint reached.
+        upgrade_main_savepoint(true, 2014011701.00);
+    }
+
     return true;
 }
diff --git a/lib/tests/upgradelib_test.php b/lib/tests/upgradelib_test.php
index 7e9be492643..0ff743f8f2e 100644
--- a/lib/tests/upgradelib_test.php
+++ b/lib/tests/upgradelib_test.php
@@ -42,4 +42,111 @@ class core_upgradelib_testcase extends advanced_testcase {
         // if there aren't any old files in the codebase.
         $this->assertFalse(upgrade_stale_php_files_present());
     }
+
+    /**
+     * Test the {@link upgrade_grade_item_fix_sortorder() function with
+     * faked duplicate sortorder data.
+     */
+    public function test_upgrade_grade_item_fix_sortorder() {
+        global $DB;
+
+        $this->resetAfterTest(true);
+
+        // The purpose of this test is to make sure that after upgrade script
+        // there is no duplicates in the field grade_items.sortorder (for each course)
+        // and the result of query "SELECT id FROM grade_items WHERE courseid=? ORDER BY sortorder, id" does not change.
+        $sequencesql = 'SELECT id FROM {grade_items} WHERE courseid=? ORDER BY sortorder, id';
+
+        // Each set is used for filling the db with fake data and will be representing the result of query:
+        // "SELECT sortorder from {grade_items} WHERE courseid=? ORDER BY id".
+        $testsets = array(
+            // Items that need no action.
+            array(1,2,3),
+            array(5,6,7),
+            array(7,6,1,3,2,5),
+            // Items with sortorder duplicates
+            array(1,2,2,3,3,4,5),
+            // Only one sortorder duplicate.
+            array(1,1),
+            array(3,3),
+            // Non-sequential sortorders with one or multiple duplicates.
+            array(3,3,7,5,6,6,9,10,8,3),
+            array(7,7,3),
+            array(3,4,5,3,5,4,7,1)
+        );
+        $origsequences = array();
+
+        // Generate the data and remember the initial sequence or items.
+        foreach ($testsets as $testset) {
+            $course = $this->getDataGenerator()->create_course();
+            foreach ($testset as $sortorder) {
+                $this->insert_fake_grade_item_sortorder($course->id, $sortorder);
+            }
+            $DB->get_records('grade_items');
+            $origsequences[$course->id] = $DB->get_fieldset_sql($sequencesql, array($course->id));
+        }
+
+        $duplicatedetectionsql = "SELECT courseid, sortorder
+                                    FROM {grade_items}
+                                GROUP BY courseid, sortorder
+                                  HAVING COUNT(id) > 1";
+
+        // Verify there are duplicates before we start the fix.
+        $dupes = $DB->record_exists_sql($duplicatedetectionsql);
+        $this->assertTrue($dupes);
+
+        // Do the work.
+        upgrade_grade_item_fix_sortorder();
+
+        // Verify that no duplicates are left in the database.
+        $dupes = $DB->record_exists_sql($duplicatedetectionsql);
+        $this->assertFalse($dupes);
+
+        // Verify that sequences are exactly the same as they were before upgrade script.
+        $idx = 0;
+        foreach ($origsequences as $courseid => $origsequence) {
+            if (count(($testsets[$idx])) == count(array_unique($testsets[$idx]))) {
+                // If there were no duplicates for this course verify that sortorders are not modified.
+                $newsortorders = $DB->get_fieldset_sql("SELECT sortorder from {grade_items} WHERE courseid=? ORDER BY id", array($courseid));
+                $this->assertEquals($testsets[$idx], $newsortorders);
+            }
+            $newsequence = $DB->get_fieldset_sql($sequencesql, array($courseid));
+            $this->assertEquals($origsequence, $newsequence,
+                    "Sequences do not match for test set $idx : ".join(',', $testsets[$idx]));
+            $idx++;
+        }
+    }
+
+    /**
+     * Populate some fake grade items into the database with specified
+     * sortorder and course id.
+     *
+     * NOTE: This function doesn't make much attempt to respect the
+     * gradebook internals, its simply used to fake some data for
+     * testing the upgradelib function. Please don't use it for other
+     * purposes.
+     *
+     * @param int $courseid id of course
+     * @param int $sortorder numeric sorting order of item
+     * @return stdClass grade item object from the database.
+     */
+    private function insert_fake_grade_item_sortorder($courseid, $sortorder) {
+        global $DB, $CFG;
+        require_once($CFG->libdir.'/gradelib.php');
+
+        $item = new stdClass();
+        $item->courseid = $courseid;
+        $item->sortorder = $sortorder;
+        $item->gradetype = GRADE_TYPE_VALUE;
+        $item->grademin = 30;
+        $item->grademax = 110;
+        $item->itemnumber = 1;
+        $item->iteminfo = '';
+        $item->timecreated = time();
+        $item->timemodified = time();
+
+        $item->id = $DB->insert_record('grade_items', $item);
+
+        return $DB->get_record('grade_items', array('id' => $item->id));
+    }
 }
diff --git a/lib/upgradelib.php b/lib/upgradelib.php
index 0ec6e24b0a2..24563fdd69f 100644
--- a/lib/upgradelib.php
+++ b/lib/upgradelib.php
@@ -2049,3 +2049,42 @@ function upgrade_rename_old_backup_files_using_shortname() {
         @rename($dir . '/' . $file, $dir . '/' . $newname);
     }
 }
+
+/**
+ * Detect duplicate grade item sortorders and resort the
+ * items to remove them.
+ */
+function upgrade_grade_item_fix_sortorder() {
+    global $DB;
+
+    // The simple way to fix these sortorder duplicates would be simply to resort each
+    // affected course. But in order to reduce the impact of this upgrade step we're trying
+    // to do it more efficiently by doing a series of update statements rather than updating
+    // every single grade item in affected courses.
+
+    $transaction = $DB->start_delegated_transaction();
+
+    $sql = "SELECT g1.id, g1.courseid, g1.sortorder
+              FROM {grade_items} g1
+              JOIN {grade_items} g2 ON g1.courseid = g2.courseid
+             WHERE g1.sortorder = g2.sortorder AND g1.id != g2.id
+             ORDER BY g1.courseid ASC, g1.sortorder DESC, g1.id DESC";
+
+    // Get all duplicates in course order, highest sort order, and higest id first so that we can make space at the
+    // bottom higher end of the sort orders and work down by id.
+    $rs = $DB->get_recordset_sql($sql);
+
+    foreach($rs as $duplicate) {
+        $DB->execute("UPDATE {grade_items}
+                         SET sortorder = sortorder + 1
+                       WHERE courseid = :courseid AND
+                       (sortorder > :sortorder OR (sortorder = :sortorder2 AND id > :id))",
+            array('courseid' => $duplicate->courseid,
+                'sortorder' => $duplicate->sortorder,
+                'sortorder2' => $duplicate->sortorder,
+                'id' => $duplicate->id));
+    }
+    $rs->close();
+
+    $transaction->allow_commit();
+}
diff --git a/version.php b/version.php
index 86888464f8b..be8cb942217 100644
--- a/version.php
+++ b/version.php
@@ -29,7 +29,7 @@
 
 defined('MOODLE_INTERNAL') || die();
 
-$version  = 2014011700.00;              // YYYYMMDD      = weekly release date of this DEV branch.
+$version  = 2014011701.00;              // YYYYMMDD      = weekly release date of this DEV branch.
                                         //         RR    = release increments - 00 in DEV branches.
                                         //           .XX = incremental changes.