diff --git a/src/lib/dom-api.html b/src/lib/dom-api.html
index 9a7b43fea4..ebde2403b4 100644
--- a/src/lib/dom-api.html
+++ b/src/lib/dom-api.html
@@ -274,7 +274,9 @@
       },
 
       _removeNodeFromParent: function(node) {
-        var parent = node._lightParent;
+        // note: we may need to notify and not have logical info so fallback
+        // to composed parentNode.
+        var parent = node._lightParent || node.parentNode;
         if (parent && hasDomApi(parent)) {
           factory(parent).notifyObserver();
         }
diff --git a/test/smoke/observeNodes-repeat.html b/test/smoke/observeNodes-repeat.html
new file mode 100644
index 0000000000..a578158758
--- /dev/null
+++ b/test/smoke/observeNodes-repeat.html
@@ -0,0 +1,108 @@
+<!doctype html>
+<html>
+<head>
+
+  <title>observeNodes-repeat</title>
+
+  <meta charset="utf-8">
+  <meta name="viewport" content="width=device-width, initial-scale=1.0">
+
+  <script src="../../../webcomponentsjs/webcomponents-lite.js"></script>
+  <link rel="import" href="../../polymer.html">
+
+<body>
+  
+  <script>
+    Polymer({
+      is: 'x-observes-nodes',
+      
+      properties: {
+        children: {
+          type: Array,
+          readOnly: true,
+          value: function() {
+            return [];
+          }
+        }
+      },
+      
+      _updateChildren: function(info) {
+        console.log('Updating children!', info);
+        var children = Polymer.dom(this).queryDistributedElements('div');
+        this._setChildren(children);
+      },
+      
+      attached: function() {
+        Polymer.dom(this).observeNodes(function(info) {
+          this._updateChildren(info);
+        }.bind(this));
+      }
+    });
+
+    function randomObject() {
+      return {
+        name: 'foo'
+      };
+    }
+
+    function randomArray(size) {
+      var array = [];
+      for (var i = 0; i < size; ++i) {
+        array.push(randomObject());
+      }
+      return array;
+    }
+
+    function numberOfDivs() {
+      return Polymer.dom(document).querySelectorAll('div').length;
+    }
+
+    function assertDivs(number) {
+      console.log('Do we have (' + number + ') divs?', number === numberOfDivs(), 'Actual: ' + numberOfDivs());
+    }
+
+    function assertChildren() {
+      var observesNodes = Polymer.dom(document).querySelector('x-observes-nodes');
+      console.log('Same number of children as divs?', observesNodes.children.length === numberOfDivs(), 'Actual: ' + observesNodes.children.length);
+    }
+
+
+
+    window.addEventListener('load', function() {
+      var dom = document.querySelector('#x-dom');
+      
+      console.log('Starting tests..');
+      
+      dom.set('items', randomArray(3));
+      
+      
+      Polymer.Base.async(function() {
+      
+        assertDivs(3);
+        assertChildren();
+
+        dom.set('items', randomArray(6));
+        
+        Polymer.Base.async(function() {
+          assertDivs(6);
+          assertChildren();
+          
+          dom.set('items', randomArray(4));
+          
+          Polymer.Base.async(function() {
+            assertDivs(4);
+            assertChildren();
+            
+            console.log('Tests done!');
+          }, 10);
+        }, 10);
+      }, 10);
+    });
+  </script>
+  
+  <template id="x-dom" is="dom-bind">
+    <x-observes-nodes><template is="dom-repeat" items="[[items]]"><div>{{item.name}}</div></template></x-observes-nodes>
+  </template>
+  
+</body>
+</html>
diff --git a/test/unit/polymer-dom-observeNodes.html b/test/unit/polymer-dom-observeNodes.html
index 9643fd635e..e1e0d28816 100644
--- a/test/unit/polymer-dom-observeNodes.html
+++ b/test/unit/polymer-dom-observeNodes.html
@@ -165,6 +165,8 @@
 
   <test-static><div>static A</div><div>static B</div></test-static>
 
+  <div id="staticDiv"></div>
+
 <script>
 
   suite('observeNodes', function() {
@@ -512,6 +514,38 @@
       document.body.removeChild(el);
     });
 
+    test('observe effective children changes in static content when adding to another host', function() {
+      var el = document.createElement('staticDiv');
+      document.body.appendChild(el);
+      var recorded;
+      var handle = Polymer.dom(el).observeNodes(function(info) {
+        recorded = info;
+      });
+      Polymer.dom.flush();
+      // add
+      var d = document.createElement('div');
+      var d1 = document.createElement('div');
+      Polymer.dom(el).appendChild(d);
+      Polymer.dom(el).appendChild(d1);
+      Polymer.dom.flush();
+      assert.equal(recorded.addedNodes.length, 2);
+      assert.equal(recorded.removedNodes.length, 0);
+      assert.equal(recorded.addedNodes[0], d);
+      assert.equal(recorded.addedNodes[1], d1);
+      // add somewhere else... we should see these as removes
+      Polymer.dom(document.body).appendChild(d);
+      Polymer.dom(document.body).appendChild(d1);
+      Polymer.dom.flush();
+      assert.equal(recorded.addedNodes.length, 0);
+      assert.equal(recorded.removedNodes.length, 2);
+      assert.equal(recorded.removedNodes[0], d);
+      assert.equal(recorded.removedNodes[1], d1);
+      // cleanup
+      Polymer.dom(document.body).removeChild(d);
+      Polymer.dom(document.body).removeChild(d1);
+      document.body.removeChild(el);
+    });
+
     test('observe effective children inside deep distributing element', function() {
       var el = document.createElement('test-content3');
       document.body.appendChild(el);
