diff --git a/src/ng/compile.js b/src/ng/compile.js
index 7b2dde884926..df0bc4749660 100644
--- a/src/ng/compile.js
+++ b/src/ng/compile.js
@@ -2119,7 +2119,14 @@ function $CompileProvider($provide, $$sanitizeUriProvider) {
       forEach(dst, function(value, key) {
         if (key.charAt(0) != '$') {
           if (src[key] && src[key] !== value) {
-            value += (key === 'style' ? ';' : ' ') + src[key];
+            var concatString = ' ';
+            if (key === 'style') {
+              concatString = ';';
+            }
+            if (key === 'ngIf') { //if ngIf is merged both conditions need to be taken into account
+              concatString = ' && ';
+            }
+            value += concatString + src[key];
           }
           dst.$set(key, value, true, srcAttr[key]);
         }
diff --git a/test/ng/directive/ngIfSpec.js b/test/ng/directive/ngIfSpec.js
index 9ee94c95b55b..ad809e46f0ae 100755
--- a/test/ng/directive/ngIfSpec.js
+++ b/test/ng/directive/ngIfSpec.js
@@ -212,6 +212,23 @@ describe('ngIf and transcludes', function() {
     });
   });
 
+  it('should allow using ngIf on the target element and on the root element of the directive template when used in a replace mode', function() {
+    module(function($compileProvider) {
+      var directive = $compileProvider.directive;
+      directive('example', valueFn({
+        template: '<div ng-if="innerCondition">guacamole</div>',
+        replace: true
+      }));
+    });
+    inject(function($compile, $rootScope) {
+      $rootScope.innerCondition = true;
+      $rootScope.outerCondition = true;
+      var element = $compile('<div><example ng-if="outerCondition"></example></div>')($rootScope);
+      $rootScope.$apply();
+      expect(element.text()).toBe('guacamole');
+      dealoc(element);
+    });
+  });
 
   it('should use the correct transcluded scope', function() {
     module(function($compileProvider) {