diff --git a/hgext/convert/monotone.py b/hgext/convert/monotone.py
--- a/hgext/convert/monotone.py
+++ b/hgext/convert/monotone.py
@@ -122,14 +122,14 @@ class monotone_source(converter_source, 
         #revision = self.mtncmd("get_revision %s" % rev).split("\n\n")
         revision = self.mtnrun("get_revision", rev).split("\n\n")
         files = {}
-        addedfiles = {}
+        ignoremove = {}
         renameddirs = []
         copies = {}
         for e in revision:
             m = self.add_file_re.match(e)
             if m:
                 files[m.group(1)] = rev
-                addedfiles[m.group(1)] = rev
+                ignoremove[m.group(1)] = rev
             m = self.patch_re.match(e)
             if m:
                 files[m.group(1)] = rev
@@ -144,6 +144,7 @@ class monotone_source(converter_source, 
                 toname = m.group(2)
                 fromname = m.group(1)
                 if self.mtnisfile(toname, rev):
+                    ignoremove[toname] = 1
                     copies[toname] = fromname
                     files[toname] = rev
                     files[fromname] = rev
@@ -155,7 +156,7 @@ class monotone_source(converter_source, 
         for fromdir, todir in renameddirs:
             renamed = {}
             for tofile in self.files:
-                if tofile in addedfiles:
+                if tofile in ignoremove:
                     continue
                 if tofile.startswith(todir + '/'):
                     renamed[tofile] = fromdir + tofile[len(todir):]
diff --git a/tests/test-convert-mtn b/tests/test-convert-mtn
--- a/tests/test-convert-mtn
+++ b/tests/test-convert-mtn
@@ -80,6 +80,14 @@ mtn add --quiet -R dir2/dir
 mtn ci -m emptydir
 mtn drop -R dir2/dir
 mtn ci -m dropdirectory
+echo '% test directory and file move'
+mkdir -p dir3/d1
+echo a > dir3/a
+mtn add dir3/a dir3/d1
+mtn ci -m dirfilemove
+mtn mv dir3/a dir3/d1/a
+mtn mv dir3/d1 dir3/d2
+mtn ci -m dirfilemove2
 cd ..
 
 echo % convert incrementally
@@ -108,5 +116,7 @@ test -d dir1/subdir1 && echo 'renamed di
 hg log -v -C -r 4 | grep copies
 echo % check file remove with directory move
 hg manifest -r 5
+echo % check file move with directory move
+hg manifest -r 9
 exit 0
 
diff --git a/tests/test-convert-mtn.out b/tests/test-convert-mtn.out
--- a/tests/test-convert-mtn.out
+++ b/tests/test-convert-mtn.out
@@ -53,19 +53,37 @@ mtn: dropping dir2/dir/emptydir from wor
 mtn: dropping dir2/dir from workspace manifest
 mtn: beginning commit on branch 'com.selenic.test'
 mtn: committed revision 2323d4bc324e6c82628dc04d47a9fd32ad24e322
+% test directory and file move
+mtn: adding dir3 to workspace manifest
+mtn: adding dir3/a to workspace manifest
+mtn: adding dir3/d1 to workspace manifest
+mtn: beginning commit on branch 'com.selenic.test'
+mtn: committed revision 47b192f720faa622f48c68d1eb075b26d405aa8b
+mtn: skipping dir3/d1, already accounted for in workspace
+mtn: renaming dir3/a to dir3/d1/a in workspace manifest
+mtn: skipping dir3, already accounted for in workspace
+mtn: renaming dir3/d1 to dir3/d2 in workspace manifest
+mtn: beginning commit on branch 'com.selenic.test'
+mtn: committed revision 8b543a400d3ee7f6d4bb1835b9b9e3747c8cb632
 % convert incrementally
 assuming destination repo.mtn-hg
 scanning source...
 sorting...
 converting...
-5 update2 "with" quotes
-4 createdir1
-3 movedir1
-2 movedir
-1 emptydir
-0 dropdirectory
-6 files updated, 0 files merged, 0 files removed, 0 files unresolved
-@  7 "dropdirectory" files: dir2/dir/subdir/f
+7 update2 "with" quotes
+6 createdir1
+5 movedir1
+4 movedir
+3 emptydir
+2 dropdirectory
+1 dirfilemove
+0 dirfilemove2
+7 files updated, 0 files merged, 0 files removed, 0 files unresolved
+@  9 "dirfilemove2" files: dir3/a dir3/d2/a
+|
+o  8 "dirfilemove" files: dir3/a
+|
+o  7 "dropdirectory" files: dir2/dir/subdir/f
 |
 o  6 "emptydir" files: dir2/dir/subdir/f
 |
@@ -87,6 +105,7 @@ dir1/subdir2/file1
 dir1/subdir2_other/file1
 dir2/a
 dir2/newfile
+dir3/d2/a
 e
 % contents
 a
@@ -108,3 +127,11 @@ dir1/subdir2_other/file1
 dir2/a
 dir2/newfile
 e
+% check file move with directory move
+bin2
+dir1/subdir2/file1
+dir1/subdir2_other/file1
+dir2/a
+dir2/newfile
+dir3/d2/a
+e