diff --git a/src/ng/location.js b/src/ng/location.js
index 1d99e9b2ea21..57fb91178090 100644
--- a/src/ng/location.js
+++ b/src/ng/location.js
@@ -668,6 +668,13 @@ function $LocationProvider(){
         if (href.indexOf('://') < 0) {         // Ignore absolute URLs
           var prefix = '#' + hashPrefix;
           if (href[0] == '/') {
+            // Account for base href already present in appBase
+            if (baseHref && href.indexOf(baseHref) === 0) {
+              href = href.substr(baseHref.length);
+              if (!href || href[0] != '/') {
+                href = '/' + href;
+              }
+            }
             // absolute path - replace old path
             absHref = appBase + prefix + href;
           } else if (href[0] == '#') {
diff --git a/test/ng/locationSpec.js b/test/ng/locationSpec.js
index 7e842e16a749..863e7e37a6b8 100644
--- a/test/ng/locationSpec.js
+++ b/test/ng/locationSpec.js
@@ -1330,6 +1330,37 @@ describe('$location', function() {
         }).not.toThrow();
       });
     });
+
+
+    it('should transform the url correctly when a base path is present and html5mode is enabled but not supported', function() {
+      var serverUrl, base;
+      module(function() {
+        return function($browser) {
+          serverUrl = 'http://server';
+          base = '/foo/bar'
+          $browser.url(serverUrl + base);
+          $browser.$$baseHref = base;
+        };
+      });
+      inject(initService(true, '', false), function($rootScope, $compile, $browser, $rootElement, $document, $location) {
+        // we need to do this otherwise we can't simulate events
+        $document.find('body').append($rootElement);
+
+        $rootElement.append('<a href="/foo/bar/view1">v1</a><a href="/foo/bar/baz/view2">v2</a><a href="/view3">v3</a>');
+        var av1 = $rootElement.find('a').eq(0);
+        var av2 = $rootElement.find('a').eq(1);
+        var av3 = $rootElement.find('a').eq(2);
+
+        browserTrigger(av1, 'click');
+        expect($browser.url()).toEqual(serverUrl + base + '#/view1');
+
+        browserTrigger(av2, 'click');
+        expect($browser.url()).toEqual(serverUrl + base + '#/baz/view2');
+
+        browserTrigger(av3, 'click');
+        expect($browser.url()).toEqual(serverUrl + base + '#/view3');
+      });
+    });
   });