diff --git a/.travis.yml b/.travis.yml
index 868882657f6..83450f62ea5 100644
--- a/.travis.yml
+++ b/.travis.yml
@@ -24,8 +24,6 @@ matrix:
     env:
     - CONDA_ENV=py36
     - EXTRA_FLAGS="--run-flaky --run-network-tests"
-  - python: 3.6
-    env: CONDA_ENV=py36-pydap
   - python: 3.6
     env: CONDA_ENV=py36-netcdf4-dev
     addons:
@@ -46,8 +44,6 @@ matrix:
     env:
     - CONDA_ENV=py36
     - EXTRA_FLAGS="--run-flaky --run-network-tests"
-  - python: 3.6
-    env: CONDA_ENV=py36-pydap
   - python: 3.6
     env: CONDA_ENV=py36-netcdf4-dev
     addons:
diff --git a/ci/requirements-py36-pydap.yml b/ci/requirements-py36-pydap.yml
deleted file mode 100644
index c10bd93f928..00000000000
--- a/ci/requirements-py36-pydap.yml
+++ /dev/null
@@ -1,19 +0,0 @@
-name: test_env
-channels:
-  - conda-forge
-dependencies:
-  - python=3.6
-  - dask
-  - distributed
-  - h5py
-  - h5netcdf
-  - matplotlib
-  - netcdf4
-  - pytest
-  - numpy
-  - scipy
-  - toolz
-  - pip:
-    - coveralls
-    - pytest-cov
-    - pydap
diff --git a/ci/requirements-py36.yml b/ci/requirements-py36.yml
index 5840a0157ba..3022c1a0886 100644
--- a/ci/requirements-py36.yml
+++ b/ci/requirements-py36.yml
@@ -19,3 +19,4 @@ dependencies:
   - pip:
     - coveralls
     - pytest-cov
+    - pydap
diff --git a/doc/whats-new.rst b/doc/whats-new.rst
index feae7ceac7e..dd3ceb54715 100644
--- a/doc/whats-new.rst
+++ b/doc/whats-new.rst
@@ -72,6 +72,9 @@ By `Keisuke Fujii <https://github.com/fujiisoup>`_.
 - ``DataArray.chunk()`` now accepts dask specific kwargs like
   ``Dataset.chunk()`` does. By `Fabien Maussion <https://github.com/fmaussion>`_.
 
+- Support for ``engine='pydap'`` with recent releases of Pydap (3.2.2+),
+  including on Python 3 (:issue:`1174`).
+
 Documentation
 ~~~~~~~~~~~~~
 
diff --git a/xarray/backends/pydap_.py b/xarray/backends/pydap_.py
index 09025589b44..a4ccbce5bc1 100644
--- a/xarray/backends/pydap_.py
+++ b/xarray/backends/pydap_.py
@@ -69,8 +69,8 @@ def open_store_variable(self, var):
         return Variable(var.dimensions, data, var.attributes)
 
     def get_variables(self):
-        return FrozenOrderedDict((k, self.open_store_variable(v))
-                                 for k, v in self.ds.iteritems())
+        return FrozenOrderedDict((k, self.open_store_variable(self.ds[k]))
+                                 for k in self.ds.keys())
 
     def get_attrs(self):
         return Frozen(_fix_global_attributes(self.ds.attributes))
diff --git a/xarray/tests/test_backends.py b/xarray/tests/test_backends.py
index 5401d0e3a60..dacb191584c 100644
--- a/xarray/tests/test_backends.py
+++ b/xarray/tests/test_backends.py
@@ -27,7 +27,7 @@
 from . import (TestCase, requires_scipy, requires_netCDF4, requires_pydap,
                requires_scipy_or_netCDF4, requires_dask, requires_h5netcdf,
                requires_pynio, has_netCDF4, has_scipy, assert_allclose,
-               flaky, requires_rasterio, assert_identical)
+               flaky, network, requires_rasterio, assert_identical)
 from .test_dataset import create_test_data
 
 try:
@@ -1361,6 +1361,7 @@ class DaskTestAutocloseTrue(DaskTest):
     autoclose = True
 
 
+@network
 @requires_scipy_or_netCDF4
 @requires_pydap
 class PydapTest(TestCase):