diff --git a/boltons/funcutils.py b/boltons/funcutils.py
index c3a11c6..d5b7f33 100644
--- a/boltons/funcutils.py
+++ b/boltons/funcutils.py
@@ -561,16 +561,24 @@ class FunctionBuilder(object):
         Raises a :exc:`ValueError` if the argument is not present.
 
         """
+        args = self.args
         d_dict = self.get_defaults_dict()
         try:
-            self.args.remove(arg_name)
+            args.remove(arg_name)
         except ValueError:
-            exc = MissingArgument('arg %r not found in %s argument list: %r'
-                                  % (arg_name, self.name, self.args))
-            exc.arg_name = arg_name
-            raise exc
-        d_dict.pop(arg_name, None)
-        self.defaults = tuple([d_dict[a] for a in self.args if a in d_dict])
+            try:
+                self.kwonlyargs.remove(arg_name)
+            except (AttributeError, ValueError):
+                # py2, or py3 and missing from both
+                exc = MissingArgument('arg %r not found in %s argument list:'
+                                      ' %r' % (arg_name, self.name, args))
+                exc.arg_name = arg_name
+                raise exc
+            else:
+                self.kwonlydefaults.pop(arg_name, None)
+        else:
+            d_dict.pop(arg_name, None)
+            self.defaults = tuple([d_dict[a] for a in args if a in d_dict])
         return
 
     def _compile(self, src, execdict):
diff --git a/tests/test_funcutils_fb_py3.py b/tests/test_funcutils_fb_py3.py
index 1f5a50f..8664b10 100644
--- a/tests/test_funcutils_fb_py3.py
+++ b/tests/test_funcutils_fb_py3.py
@@ -1,7 +1,10 @@
-from boltons.funcutils import wraps, FunctionBuilder
+
+import inspect
 
 import pytest
 
+from boltons.funcutils import wraps, FunctionBuilder
+
 
 def pita_wrap(flag=False):
 
@@ -42,6 +45,39 @@ def test_wraps_py3():
         True, 'kwonly_non_roundtrippable_repr', 2)
 
 
+def test_remove_kwonly_arg():
+    # example adapted from https://github.com/mahmoud/boltons/issues/123
+
+    def darkhelm_inject_loop(func):
+        sig = inspect.signature(func)
+        loop_param = sig.parameters['loop'].replace(default=None)
+        sig = sig.replace(parameters=[loop_param])
+
+        def add_loop(args, kwargs):
+            bargs = sig.bind(*args, **kwargs)
+            bargs.apply_defaults()
+            if bargs.arguments['loop'] is None:
+                bargs.arguments['loop'] = "don't look at me, I just use gevent"
+
+            return bargs.arguments
+
+        def wrapper(*args, **kwargs):
+            return func(**add_loop(args, kwargs))
+
+        return wraps(func, injected=['loop'])(wrapper)
+
+    @darkhelm_inject_loop
+    def example(test='default', *, loop='lol'):
+        return loop
+
+    fb_example = FunctionBuilder.from_func(example)
+    assert 'test' in fb_example.args
+    assert fb_example.get_defaults_dict()['test'] == 'default'
+
+    assert 'loop' not in fb_example.kwonlyargs
+    assert 'loop' not in fb_example.kwonlydefaults
+
+
 @pytest.mark.parametrize('signature,should_match',
                          [('a, *, b', True),
                           ('a,*,b', True),