diff --git a/base/linalg/dense.jl b/base/linalg/dense.jl
index 135813eda5f1a..39a4220275456 100644
--- a/base/linalg/dense.jl
+++ b/base/linalg/dense.jl
@@ -101,12 +101,8 @@ function gradient(F::Vector, h::Vector)
 end
 
 function diagind(m::Integer, n::Integer, k::Integer=0)
-    if 0 < k < n
-        return range(k*m+1, m+1, min(m, n-k))
-    elseif 0 <= -k < m
-        return range(1-k, m+1, min(m+k,n))
-    end
-    throw(BoundsError())
+    -m <= k <= n || throw(BoundsError())
+    k <= 0 ? range(1-k, m+1, min(m+k, n)) : range(k*m+1, m+1, min(m, n-k))
 end
 
 diagind(A::AbstractMatrix, k::Integer=0) = diagind(size(A,1), size(A,2), k)
diff --git a/test/linalg3.jl b/test/linalg3.jl
index f270d4c71a0cc..0dc8fd70660fd 100644
--- a/test/linalg3.jl
+++ b/test/linalg3.jl
@@ -202,13 +202,32 @@ Ai = int(ceil(Ar*100))
 # issue #6450
 @test dot({1.0,2.0},{3.5,4.5}) === 12.5
 
-# Issue 7181
-A = reshape([1:9], (3, 3))
-@test_throws BoundsError diag(A, 3)
-@test [7] == diag(A, 2)
-@test [4, 8] == diag(A, 1)
-@test [1,5,9] == diag(A, 0)
-@test [2,6] == diag(A, -1)
-@test [3] == diag(A, -2)
-@test_throws BoundsError diag(A, -3)
-
+# issue #7181
+A = [ 1  5  9
+      2  6 10
+      3  7 11
+      4  8 12 ]
+@test_throws BoundsError diag(A, -5)
+@test diag(A,-4) == []
+@test diag(A,-3) == [4]
+@test diag(A,-2) == [3,8]
+@test diag(A,-1) == [2,7,12]
+@test diag(A, 0) == [1,6,11]
+@test diag(A, 1) == [5,10]
+@test diag(A, 2) == [9]
+@test diag(A, 3) == []
+@test_throws BoundsError diag(A, 4)
+
+@test diag(zeros(0,0)) == []
+@test_throws BoundsError diag(zeros(0,0),1)
+@test_throws BoundsError diag(zeros(0,0),-1)
+
+@test diag(zeros(1,0)) == []
+@test diag(zeros(1,0),-1) == []
+@test_throws BoundsError diag(zeros(1,0),1)
+@test_throws BoundsError diag(zeros(1,0),-2)
+
+@test diag(zeros(0,1)) == []
+@test diag(zeros(0,1),1) == []
+@test_throws BoundsError diag(zeros(0,1),-1)
+@test_throws BoundsError diag(zeros(0,1),2)