diff --git a/src/rustc/metadata/astencode.rs b/src/rustc/metadata/astencode.rs
index d3d8593b654c..d7215fbfcab3 100644
--- a/src/rustc/metadata/astencode.rs
+++ b/src/rustc/metadata/astencode.rs
@@ -63,7 +63,7 @@ fn encode_inlined_item(ecx: @e::encode_ctxt,
     let id_range = compute_id_range(ii);
     ebml_w.wr_tag(c::tag_ast as uint) {||
         encode_id_range(ebml_w, id_range);
-        encode_ast(ebml_w, ii);
+        encode_ast(ebml_w, simplify_ast(ii));
         encode_side_tables_for_ii(ecx, ebml_w, ii);
     }
 
@@ -326,6 +326,44 @@ fn encode_ast(ebml_w: ebml::writer, item: ast::inlined_item) {
     }
 }
 
+// Produces a simplified copy of the AST which does not include things
+// that we do not need to or do not want to export.  For example, we
+// do not include any nested items: if these nested items are to be
+// inlined, their AST will be exported separately (this only makes
+// sense because, in Rust, nested items are independent except for
+// their visibility).
+//
+// As it happens, trans relies on the fact that we do not export
+// nested items, as otherwise it would get confused when translating
+// inlined items.
+fn simplify_ast(ii: ast::inlined_item) -> ast::inlined_item {
+    fn drop_nested_items(blk: ast::blk_, fld: fold::ast_fold) -> ast::blk_ {
+        let stmts_sans_items = vec::filter(blk.stmts) {|stmt|
+            alt stmt.node {
+              ast::stmt_expr(_, _) | ast::stmt_semi(_, _) |
+              ast::stmt_decl(@{node: ast::decl_local(_), span: _}, _) { true }
+              ast::stmt_decl(@{node: ast::decl_item(_), span: _}, _) { false }
+            }
+        };
+        let blk_sans_items = { stmts: stmts_sans_items with blk };
+        fold::noop_fold_block(blk_sans_items, fld)
+    }
+
+    let fld = fold::make_fold({
+        fold_block: fold::wrap(drop_nested_items)
+        with *fold::default_ast_fold()
+    });
+
+    alt ii {
+      ast::ii_item(i) {
+        ast::ii_item(fld.fold_item(i))
+      }
+      ast::ii_method(d, m) {
+        ast::ii_method(d, fld.fold_method(m))
+      }
+    }
+}
+
 fn decode_ast(par_doc: ebml::doc) -> ast::inlined_item {
     let chi_doc = par_doc[c::tag_tree];
     let d = serialization::mk_ebml_deserializer(chi_doc);
@@ -923,3 +961,26 @@ fn test_more() {
         }
     });
 }
+
+#[test]
+fn test_simplification() {
+    let ext_cx = mk_ctxt();
+    let item_in = ast::ii_item(#ast(item) {
+        fn new_int_alist<B: copy>() -> alist<int, B> {
+            fn eq_int(&&a: int, &&b: int) -> bool { a == b }
+            ret {eq_fn: eq_int, mut data: []};
+        }
+    });
+    let item_out = simplify_ast(item_in);
+    let item_exp = ast::ii_item(#ast(item) {
+        fn new_int_alist<B: copy>() -> alist<int, B> {
+            ret {eq_fn: eq_int, mut data: []};
+        }
+    });
+    alt (item_out, item_exp) {
+      (ast::ii_item(item_out), ast::ii_item(item_exp)) {
+        assert pprust::item_to_str(item_out) == pprust::item_to_str(item_exp);
+      }
+      _ { fail; }
+    }
+}
\ No newline at end of file
diff --git a/src/rustc/middle/trans/base.rs b/src/rustc/middle/trans/base.rs
index b6703a8fe83e..910c6c93ac59 100644
--- a/src/rustc/middle/trans/base.rs
+++ b/src/rustc/middle/trans/base.rs
@@ -2146,18 +2146,31 @@ fn monomorphic_fn(ccx: crate_ctxt, fn_id: ast::def_id, substs: [ty::t],
 fn maybe_instantiate_inline(ccx: crate_ctxt, fn_id: ast::def_id)
     -> ast::def_id {
     alt ccx.external.find(fn_id) {
-      some(some(node_id)) { local_def(node_id) } // Already inline
+      some(some(node_id)) {
+        // Already inline
+        #debug["maybe_instantiate_inline(%s): already inline as node id %d",
+               ty::item_path_str(ccx.tcx, fn_id), node_id];
+        local_def(node_id)
+      }
       some(none) { fn_id } // Not inlinable
       none { // Not seen yet
         alt csearch::maybe_get_item_ast(ccx.tcx, ccx.maps, fn_id) {
           none { ccx.external.insert(fn_id, none); fn_id }
           some(ast::ii_item(item)) {
+            #debug["maybe_instantiate_inline(%s): inlining to local id %d",
+                   ty::item_path_str(ccx.tcx, fn_id),
+                   item.id];
             ccx.external.insert(fn_id, some(item.id));
             collect_item(ccx, @mutable none, item);
             trans_item(ccx, *item);
             local_def(item.id)
           }
           some(ast::ii_method(impl_did, mth)) {
+            #debug["maybe_instantiate_inline(%s): \
+                    inlining method of %s to %d",
+                   ty::item_path_str(ccx.tcx, fn_id),
+                   ty::item_path_str(ccx.tcx, impl_did),
+                   mth.id];
             ccx.external.insert(fn_id, some(mth.id));
             compute_ii_method_info(ccx, impl_did, mth) {|ty, bounds, path|
                 let mth_ty = ty::node_id_to_type(ccx.tcx, mth.id);
@@ -3586,7 +3599,7 @@ fn zero_alloca(cx: block, llptr: ValueRef, t: ty::t)
 }
 
 fn trans_stmt(cx: block, s: ast::stmt) -> block {
-    #debug["trans_expr(%s)", stmt_to_str(s)];
+    #debug["trans_stmt(%s)", stmt_to_str(s)];
 
     if (!cx.sess().opts.no_asm_comments) {
         add_span_comment(cx, s.span, stmt_to_str(s));
@@ -4330,8 +4343,10 @@ fn trans_item(ccx: crate_ctxt, item: ast::item) {
         let llfndecl = alt ccx.item_ids.find(item.id) {
           some(llfndecl) { llfndecl }
           _ {
-            ccx.sess.span_bug(item.span,
-                                "unbound function item in trans_item");
+            ccx.sess.span_bug(
+                item.span,
+                #fmt["unbound function item %s in trans_item",
+                     ast_map::path_to_str(*path)]);
           }
         };
         if decl.purity != ast::crust_fn  {
diff --git a/src/rustc/syntax/fold.rs b/src/rustc/syntax/fold.rs
index d8088e39cb6d..42ac5ca7da62 100644
--- a/src/rustc/syntax/fold.rs
+++ b/src/rustc/syntax/fold.rs
@@ -11,6 +11,7 @@ export noop_fold_expr;
 export noop_fold_pat;
 export noop_fold_mod;
 export noop_fold_ty;
+export noop_fold_block;
 export wrap;
 
 type ast_fold = @mutable a_f;
diff --git a/src/test/auxiliary/cci_nested_lib.rs b/src/test/auxiliary/cci_nested_lib.rs
new file mode 100644
index 000000000000..9e3169119bcd
--- /dev/null
+++ b/src/test/auxiliary/cci_nested_lib.rs
@@ -0,0 +1,29 @@
+type alist<A,B> = { eq_fn: fn@(A,A) -> bool, mut data: [(A,B)] };
+
+fn alist_add<A: copy, B: copy>(lst: alist<A,B>, k: A, v: B) {
+    lst.data += [(k, v)];
+}
+
+fn alist_get<A: copy, B: copy>(lst: alist<A,B>, k: A) -> B {
+    let eq_fn = lst.eq_fn;
+    for pair in lst.data {
+        let (ki, vi) = pair; // copy req'd for alias analysis
+        if eq_fn(k, ki) { ret vi; }
+    }
+    fail;
+}
+
+#[inline]
+fn new_int_alist<B: copy>() -> alist<int, B> {
+    fn eq_int(&&a: int, &&b: int) -> bool { a == b }
+    ret {eq_fn: eq_int,
+         mut data: []};
+}
+
+#[inline]
+fn new_int_alist_2<B: copy>() -> alist<int, B> {
+    #[inline]
+    fn eq_int(&&a: int, &&b: int) -> bool { a == b }
+    ret {eq_fn: eq_int,
+         mut data: []};
+}
\ No newline at end of file
diff --git a/src/test/run-pass/cci_nested_exe.rs b/src/test/run-pass/cci_nested_exe.rs
new file mode 100644
index 000000000000..c258d2d15b67
--- /dev/null
+++ b/src/test/run-pass/cci_nested_exe.rs
@@ -0,0 +1,21 @@
+// xfail-fast - check-fast doesn't understand aux-build
+// aux-build:cci_nested_lib.rs
+
+use std;
+use cci_nested_lib;
+import std::io;
+import cci_nested_lib::*;
+
+fn main() {
+    let lst = new_int_alist();
+    alist_add(lst, 22, "hi");
+    alist_add(lst, 44, "ho");
+    assert alist_get(lst, 22) == "hi";
+    assert alist_get(lst, 44) == "ho";
+
+    let lst = new_int_alist_2();
+    alist_add(lst, 22, "hi");
+    alist_add(lst, 44, "ho");
+    assert alist_get(lst, 22) == "hi";
+    assert alist_get(lst, 44) == "ho";
+}