diff --git a/mercurial/cmdutil.py b/mercurial/cmdutil.py
--- a/mercurial/cmdutil.py
+++ b/mercurial/cmdutil.py
@@ -470,7 +470,7 @@ def copy(ui, repo, pats, opts, rename=Fa
     if len(pats) == 1:
         raise util.Abort(_('no destination specified'))
     dest = pats.pop()
-    destdirexists = os.path.isdir(dest)
+    destdirexists = os.path.isdir(dest) and not os.path.islink(dest)
     if not destdirexists:
         if len(pats) > 1 or util.patkind(pats[0], None)[0]:
             raise util.Abort(_('with multiple sources, destination must be an '
diff --git a/tests/test-symlink-basic b/tests/test-symlink-basic
--- a/tests/test-symlink-basic
+++ b/tests/test-symlink-basic
@@ -38,3 +38,13 @@ echo '% copies'
 hg cp -v dangling dangling2
 hg st -Cmard
 $TESTDIR/readlink.py dangling dangling2
+
+echo '% issue995'
+hg up -C
+mkdir dir
+ln -s dir dirlink
+hg ci -qAm 'add dirlink'
+mkdir newdir
+mv dir newdir/dir
+mv dirlink newdir/dirlink
+hg mv -A dirlink newdir/dirlink
diff --git a/tests/test-symlink-basic.out b/tests/test-symlink-basic.out
--- a/tests/test-symlink-basic.out
+++ b/tests/test-symlink-basic.out
@@ -27,3 +27,5 @@ A dangling2
   dangling
 dangling -> void
 dangling2 -> void
+% issue995
+0 files updated, 0 files merged, 1 files removed, 0 files unresolved