diff --git a/mercurial/patch.py b/mercurial/patch.py
--- a/mercurial/patch.py
+++ b/mercurial/patch.py
@@ -2258,14 +2258,21 @@ def diff(repo, node1=None, node2=None, m
 
     modifiedset = set(modified)
     addedset = set(added)
+    removedset = set(removed)
     for f in modified:
         if f not in ctx1:
             # Fix up added, since merged-in additions appear as
             # modifications during merges
             modifiedset.remove(f)
             addedset.add(f)
+    for f in removed:
+        if f not in ctx1:
+            # Merged-in additions that are then removed are reported as removed.
+            # They are not in ctx1, so We don't want to show them in the diff.
+            removedset.remove(f)
     modified = sorted(modifiedset)
     added = sorted(addedset)
+    removed = sorted(removedset)
 
     def difffn(opts, losedata):
         return trydiff(repo, revs, ctx1, ctx2, modified, added, removed,
diff --git a/tests/test-diffdir.t b/tests/test-diffdir.t
--- a/tests/test-diffdir.t
+++ b/tests/test-diffdir.t
@@ -38,3 +38,33 @@
   $ hg diff -r tip -r ""
   hg: parse error: empty query
   [255]
+
+Remove a file that was added via merge. Since the file is not in parent 1,
+it should not be in the diff.
+
+  $ hg ci -m 'a=foo' a
+  $ hg co -Cq null
+  $ echo 123 > b
+  $ hg add b
+  $ hg ci -m "b"
+  created new head
+  $ hg merge 1
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  (branch merge, don't forget to commit)
+  $ hg rm -f a
+  $ hg diff --nodates
+
+Rename a file that was added via merge. Since the rename source is not in
+parent 1, the diff should be relative to /dev/null
+
+  $ hg co -Cq 2
+  $ hg merge 1
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  (branch merge, don't forget to commit)
+  $ hg mv a a2
+  $ hg diff --nodates
+  diff -r cf44b38435e5 a2
+  --- /dev/null
+  +++ b/a2
+  @@ -0,0 +1,1 @@
+  +foo