diff --git a/src/ng/location.js b/src/ng/location.js
index 7576015c5d5e..b5f102930365 100644
--- a/src/ng/location.js
+++ b/src/ng/location.js
@@ -525,7 +525,7 @@ function $LocationProvider(){
 
       // update location with href without the prefix
       href = absHref.substr(absUrlPrefix.length);
-      if (href.charAt(0) == '#') href = href.substr(1);
+      if (href.indexOf('#' + hashPrefix) == 0) href = href.substr(hashPrefix.length + 1);
       $location.url(href);
       $rootScope.$apply();
       event.preventDefault();
diff --git a/test/ng/locationSpec.js b/test/ng/locationSpec.js
index 543232c3a70f..91f3688c57fc 100644
--- a/test/ng/locationSpec.js
+++ b/test/ng/locationSpec.js
@@ -999,6 +999,36 @@ describe('$location', function() {
         $rootElement.remove();
       });
     });
+
+
+    it('should not mess up hash urls when clicking on links in hashbang mode with a prefix',
+        function() {
+      var base;
+      module(function($locationProvider) {
+        return function($browser) {
+          window.location.hash = '!someHash';
+          $browser.url(base = window.location.href);
+          base = base.split('#')[0];
+          $locationProvider.hashPrefix('!');
+        }
+      });
+      inject(function($rootScope, $compile, $browser, $rootElement, $document, $location) {
+        // we need to do this otherwise we can't simulate events
+        $document.find('body').append($rootElement);
+
+        var element = $compile('<a href="#!/view1">v1</a><a href="#!/view2">v2</a>')($rootScope);
+        $rootElement.append(element);
+        var av1 = $rootElement.find('a').eq(0);
+        var av2 = $rootElement.find('a').eq(1);
+
+
+        browserTrigger(av1, 'click');
+        expect($browser.url()).toEqual(base + '#!/view1');
+
+        browserTrigger(av2, 'click');
+        expect($browser.url()).toEqual(base + '#!/view2');
+      });
+    });
   });