diff --git a/lib/ace/snippets.js b/lib/ace/snippets.js
index 3e00008b..aa1d71b5 100644
--- a/lib/ace/snippets.js
+++ b/lib/ace/snippets.js
@@ -282,38 +282,73 @@ var SnippetManager = function() {
             if (typeof p != "object")
                 return;
             var id = p.tabstopId;
-            if (!tabstops[id]) {
-                tabstops[id] = [];
-                tabstops[id].index = id;
-                tabstops[id].value = "";
+            var ts = tabstops[id];
+            if (!ts) {
+                ts = tabstops[id] = [];
+                ts.index = id;
+                ts.value = "";
             }
-            if (tabstops[id].indexOf(p) != -1)
+            if (ts.indexOf(p) !== -1)
                 return;
-            tabstops[id].push(p);
+            ts.push(p);
             var i1 = tokens.indexOf(p, i + 1);
-            if (i1 == -1)
+            if (i1 === -1)
                 return;
-            var value = tokens.slice(i + 1, i1).join("");
-            if (value)
-                tabstops[id].value = value;
+
+            var value = tokens.slice(i + 1, i1);
+            var isNested = value.some(function(t) {return typeof t === "object"});          
+            if (isNested && !ts.value) {
+                ts.value = value;
+            } else if (value.length && (!ts.value || typeof ts.value !== "string")) {
+                ts.value = value.join("");
+            }
         });
 
-        tabstops.forEach(function(ts) {
-            ts.value && ts.forEach(function(p) {
-                var i = tokens.indexOf(p);
-                var i1 = tokens.indexOf(p, i + 1);
-                if (i1 == -1)
-                    tokens.splice(i + 1, 0, ts.value, p);
-                else if (i1 == i + 1)
-                    tokens.splice(i + 1, 0, ts.value);
-            });
-        });
+        // expand tabstop values
+        tabstops.forEach(function(ts) {ts.length = 0});
+        var expanding = {};
+        function copyValue(val) {
+            var copy = []
+            for (var i = 0; i < val.length; i++) {
+                var p = val[i];
+                if (typeof p == "object") {
+                    if (expanding[p.tabstopId])
+                        continue;
+                    var j = val.lastIndexOf(p, i - 1);
+                    p = copy[j] || {tabstopId: p.tabstopId};
+                }
+                copy[i] = p;
+            }
+            return copy;
+        }
+        for (var i = 0; i < tokens.length; i++) {
+            var p = tokens[i];
+            if (typeof p != "object")
+                continue;
+            var id = p.tabstopId;
+            var i1 = tokens.indexOf(p, i + 1);
+            if (expanding[id] == p) { 
+                expanding[id] = null;
+                continue;
+            }
+            
+            var ts = tabstops[id];
+            var arg = typeof ts.value == "string" ? [ts.value] : copyValue(ts.value);
+            arg.unshift(i + 1, Math.max(0, i1 - i));
+            arg.push(p);
+            expanding[id] = p;
+            tokens.splice.apply(tokens, arg);
+
+            if (ts.indexOf(p) === -1)
+                ts.push(p);
+        };
+        
         // convert to plain text
         var row = 0, column = 0;
         var text = "";
         tokens.forEach(function(t) {
-            if (typeof t == "string") {
-                if (t[0] == "\n"){
+            if (typeof t === "string") {
+                if (t[0] === "\n"){
                     column = t.length - 1;
                     row ++;
                 } else
diff --git a/lib/ace/snippets_test.js b/lib/ace/snippets_test.js
index 52aab4f0..1870d950 100644
--- a/lib/ace/snippets_test.js
+++ b/lib/ace/snippets_test.js
@@ -34,11 +34,20 @@ if (typeof process !== "undefined") {
 
 define(function(require, exports, module) {
 "use strict";
+var EditSession = require("./edit_session").EditSession;
+var Editor = require("./editor").Editor;
+var MockRenderer = require("./test/mockrenderer").MockRenderer;
+var MultiSelect = require("./multi_select").MultiSelect;
 
 var snippetManager = require("./snippets").snippetManager;
 var assert = require("./test/assertions");
 
 module.exports = {
+    setUp : function(next) {
+        this.editor = new Editor(new MockRenderer());
+        next();
+    },
+    
     "test: textmate style format strings" : function() {
         var fmt = snippetManager.tmStrFormat;
         snippetManager.tmStrFormat("hello", {
@@ -86,6 +95,32 @@ module.exports = {
         assert.equal(tokens[1].fmt, "\\ul\\/");
         assert.equal(tokens[1].guard, "as\\/d");
         assert.equal(tokens[1].flag, "g");
+    },
+    "test: expand snippet with nested tabstops": function() {
+        var content = "-${1}-${1:1}--${2:2 ${3} 2}-${3:3 $1 3}-${4:4 $2 4}";
+        this.editor.setValue("");
+        snippetManager.insertSnippet(this.editor, content);
+        assert.equal(this.editor.getValue(), "-1-1--2 3 1 3 2-3 1 3-4 2 3 1 3 2 4");
+        
+        assert.equal(this.editor.getSelectedText(), "1\n1\n1\n1\n1");
+        this.editor.tabstopManager.tabNext();
+        assert.equal(this.editor.getSelectedText(), "2 3 1 3 2\n2 3 1 3 2");
+        this.editor.tabstopManager.tabNext();
+        assert.equal(this.editor.getSelectedText(), "3 1 3\n3 1 3\n3 1 3");
+        this.editor.tabstopManager.tabNext();
+        assert.equal(this.editor.getSelectedText(), "4 2 3 1 3 2 4");
+        this.editor.tabstopManager.tabNext();
+        assert.equal(this.editor.getSelectedText(), "");
+        
+        this.editor.setValue("");
+        snippetManager.insertSnippet(this.editor, "-${1:a$2}-${2:b$1}");
+        assert.equal(this.editor.getValue(), "-ab-ba");
+        
+        assert.equal(this.editor.getSelectedText(), "ab\na");
+        this.editor.tabstopManager.tabNext();
+        assert.equal(this.editor.getSelectedText(), "b\nba");
+        this.editor.tabstopManager.tabNext();
+        assert.equal(this.editor.getSelectedText(), "");
     }
 };