diff --git a/src/ng/location.js b/src/ng/location.js
index a6c3952a9036..3caa14e8de61 100644
--- a/src/ng/location.js
+++ b/src/ng/location.js
@@ -268,6 +268,16 @@ function LocationHashbangInHtml5Url(appBase, hashPrefix) {
       return appBaseNoFile;
     }
   };
+
+  this.$$compose = function() {
+    var search = toKeyValue(this.$$search),
+        hash = this.$$hash ? '#' + encodeUriSegment(this.$$hash) : '';
+
+    this.$$url = encodePath(this.$$path) + (search ? '?' + search : '') + hash;
+    // include hashPrefix in $$absUrl when $$url is empty so IE8 & 9 do not reload page because of removal of '#'
+    this.$$absUrl = appBase + hashPrefix + this.$$url;
+  };
+
 }
 
 
@@ -642,6 +652,39 @@ function $LocationProvider(){
         absHref = urlResolve(absHref.animVal).href;
       }
 
+      // Make relative links work in HTML5 mode for legacy browsers (or at least IE8 & 9)
+      // The href should be a regular url e.g. /link/somewhere or link/somewhere or ../somewhere or
+      // somewhere#anchor or http://example.com/somewhere
+      if (LocationMode === LocationHashbangInHtml5Url) {
+        // get the actual href attribute - see
+        // http://msdn.microsoft.com/en-us/library/ie/dd347148(v=vs.85).aspx
+        var href = elm.attr('href') || elm.attr('xlink:href');
+
+        if (href.indexOf('://') < 0) {         // Ignore absolute URLs
+          var prefix = '#' + hashPrefix;
+          if (href[0] == '/') {
+            // absolute path - replace old path
+            absHref = appBase + prefix + href;
+          } else if (href[0] == '#') {
+            // local anchor
+            absHref = appBase + prefix + ($location.path() || '/') + href;
+          } else {
+            // relative path - join with current path
+            var stack = $location.path().split("/"),
+              parts = href.split("/");
+            for (var i=0; i<parts.length; i++) {
+              if (parts[i] == ".")
+                continue;
+              else if (parts[i] == "..")
+                stack.pop();
+              else if (parts[i].length)
+                stack.push(parts[i]);
+            }
+            absHref = appBase + prefix + stack.join('/');
+          }
+        }
+      }
+
       var rewrittenUrl = $location.$$rewrite(absHref);
 
       if (absHref && !elm.attr('target') && rewrittenUrl && !event.isDefaultPrevented()) {
diff --git a/test/ng/locationSpec.js b/test/ng/locationSpec.js
index ff823d306efd..37b78af0b6ea 100644
--- a/test/ng/locationSpec.js
+++ b/test/ng/locationSpec.js
@@ -779,15 +779,22 @@ describe('$location', function() {
 
     var root, link, originalBrowser, lastEventPreventDefault;
 
-    function configureService(linkHref, html5Mode, supportHist, attrs, content) {
+    function configureService(linkHref, html5Mode, supportHist, relLink, attrs, content) {
+      if (typeof relLink !== "boolean") {
+        content = attrs;
+        attrs = relLink;
+        relLink = false;
+      }
       module(function($provide, $locationProvider) {
         attrs = attrs ? ' ' + attrs + ' ' : '';
 
         // fake the base behavior
-        if (linkHref[0] == '/') {
-          linkHref = 'http://host.com' + linkHref;
-        } else if(!linkHref.match(/:\/\//)) {
-          linkHref = 'http://host.com/base/' + linkHref;
+        if (!relLink) {
+          if (linkHref[0] == '/') {
+            linkHref = 'http://host.com' + linkHref;
+          } else if(!linkHref.match(/:\/\//)) {
+            linkHref = 'http://host.com/base/' + linkHref;
+          }
         }
 
         link = jqLite('<a href="' + linkHref + '"' + attrs + '>' + content + '</a>')[0];
@@ -1067,6 +1074,51 @@ describe('$location', function() {
     });
 
 
+    it('should rewrite relative links relative to current path when history disabled', function() {
+      configureService('link', true, false, true);
+      inject(
+        initBrowser(),
+        initLocation(),
+        function($browser, $location) {
+          $location.path('/some');
+          browserTrigger(link, 'click');
+          expectRewriteTo($browser, 'http://host.com/base/index.html#!/some/link');
+        }
+      );
+    });
+
+
+    it('should replace current path when link begins with "/" and history disabled', function() {
+      configureService('/link', true, false, true);
+      inject(
+        initBrowser(),
+        initLocation(),
+        function($browser, $location) {
+          $location.path('/some');
+          browserTrigger(link, 'click');
+          expectRewriteTo($browser, 'http://host.com/base/index.html#!/link');
+        }
+      );
+    });
+
+
+    it('should replace current hash fragment when link begins with "#" history disabled', function() {
+      configureService('#link', true, false, true);
+      inject(
+        initBrowser(),
+        initLocation(),
+        function($browser, $location) {
+          // Initialize browser URL
+          $location.path('/some');
+          $location.hash('foo');
+          browserTrigger(link, 'click');
+          expect($location.hash()).toBe('link');
+          expectRewriteTo($browser, 'http://host.com/base/index.html#!/some#link');
+        }
+      );
+    });
+
+
     // don't run next tests on IE<9, as browserTrigger does not simulate pressed keys
     if (!(msie < 9)) {