diff --git a/hw/i386/kvm/xenstore_impl.c b/hw/i386/kvm/xenstore_impl.c
index c07b807d13..ca8be5e0d4 100644
--- a/hw/i386/kvm/xenstore_impl.c
+++ b/hw/i386/kvm/xenstore_impl.c
@@ -25,6 +25,8 @@ typedef struct XsNode {
     Object obj;
     GByteArray *content;
     GHashTable *children;
+    bool deleted_in_tx;
+    bool modified_in_tx;
 #ifdef XS_NODE_UNIT_TEST
     gchar *name; /* debug only */
 #endif
@@ -119,6 +121,12 @@ static XsNode *xs_node_copy(XsNode *old)
 {
     XsNode *n = xs_node_new();
 
+#ifdef XS_NODE_UNIT_TEST
+    if (n->name) {
+        n->name = g_strdup(old->name);
+    }
+#endif
+
     if (old->children) {
         n->children = g_hash_table_new_full(g_str_hash, g_str_equal, g_free,
                                             object_unref);
@@ -159,6 +167,7 @@ struct walk_op {
 
     GList *watches;
     unsigned int dom_id;
+    unsigned int tx_id;
 
     /*
      * This is maintained on the way *down* the walk to indicate
@@ -174,6 +183,9 @@ struct walk_op {
     bool mutating;
     bool create_dirs;
     bool in_transaction;
+
+    /* Tracking during recursion so we know which is first. */
+    bool deleted_in_tx;
 };
 
 static void fire_watches(struct walk_op *op, bool parents)
@@ -218,6 +230,9 @@ static int xs_node_add_content(XsNode **n, struct walk_op *op)
         g_byte_array_unref((*n)->content);
     }
     (*n)->content = g_byte_array_ref(op->op_opaque);
+    if (op->tx_id != XBT_NULL) {
+        (*n)->modified_in_tx = true;
+    }
     return 0;
 }
 
@@ -273,10 +288,49 @@ static int node_rm_recurse(gpointer key, gpointer value, gpointer user_data)
     return this_inplace;
 }
 
+static XsNode *xs_node_copy_deleted(XsNode *old);
+static void copy_deleted_recurse(gpointer key, gpointer value,
+                                 gpointer user_data)
+{
+    XsNode *n = xs_node_copy_deleted(value);
+    g_hash_table_insert(user_data, g_strdup(key), n);
+}
+
+static XsNode *xs_node_copy_deleted(XsNode *old)
+{
+    XsNode *n = xs_node_new();
+
+#ifdef XS_NODE_UNIT_TEST
+    if (old->name) {
+        n->name = g_strdup(old->name);
+    }
+#endif
+
+    if (old->children) {
+        n->children = g_hash_table_new_full(g_str_hash, g_str_equal, g_free,
+                                            object_unref);
+        g_hash_table_foreach(old->children, copy_deleted_recurse, n->children);
+    }
+    n->deleted_in_tx = true;
+    /* If it gets resurrected we only fire a watch if it lost its content */
+    if (old->content) {
+        n->modified_in_tx = true;
+    }
+    return n;
+}
+
 static int xs_node_rm(XsNode **n, struct walk_op *op)
 {
     bool this_inplace = op->inplace;
 
+    if (op->tx_id != XBT_NULL) {
+        /* It's not trivial to do inplace handling for this one */
+        XsNode *old = *n;
+        *n = xs_node_copy_deleted(old);
+        xs_node_unref(old);
+        return 0;
+    }
+
     /* Fire watches for any node in the subtree which gets deleted. */
     if ((*n)->children) {
         g_hash_table_foreach_remove((*n)->children, node_rm_recurse, op);
@@ -347,6 +401,10 @@ static int xs_node_walk(XsNode **n, struct walk_op *op)
     }
 
     if (child) {
+        if (child->deleted_in_tx) {
+            assert(child->obj.ref == 1);
+            child->deleted_in_tx = false;
+        }
         xs_node_ref(child);
         /*
          * Now we own it too. But if we can modify inplace, that's going to
@@ -479,6 +537,7 @@ static int init_walk_op(XenstoreImplState *s, struct walk_op *op,
     op->create_dirs = false;
     op->in_transaction = false;
     op->dom_id = dom_id;
+    op->tx_id = tx_id;
     op->s = s;
 
     if (tx_id == XBT_NULL) {
@@ -580,8 +639,69 @@ int xs_impl_transaction_start(XenstoreImplState *s, unsigned int dom_id,
     return 0;
 }
 
+static gboolean tx_commit_walk(gpointer key, gpointer value,
+                               gpointer user_data)
+{
+    struct walk_op *op = user_data;
+    int path_len = strlen(op->path);
+    int key_len = strlen(key);
+    bool fire_parents = true;
+    XsWatch *watch;
+    XsNode *n = value;
+
+    if (n->obj.ref != 1) {
+        return false;
+    }
+
+    if (n->deleted_in_tx) {
+        /*
+         * We first watches on our parents if we are the *first* node
+         * to be deleted (the topmost one). This matches the behaviour
+         * when deleting in the live tree.
+         */
+        fire_parents = !op->deleted_in_tx;
+
+        /* Only used on the way down so no need to clear it later */
+        op->deleted_in_tx = true;
+    }
+
+    assert(key_len + path_len + 2 <= sizeof(op->path));
+    op->path[path_len] = '/';
+    memcpy(op->path + path_len + 1, key, key_len + 1);
+
+    watch = g_hash_table_lookup(op->s->watches, op->path);
+    if (watch) {
+        op->watches = g_list_append(op->watches, watch);
+    }
+
+    if (n->children) {
+        g_hash_table_foreach_remove(n->children, tx_commit_walk, op);
+    }
+
+    if (watch) {
+        op->watches = g_list_remove(op->watches, watch);
+    }
+
+    /*
+     * Don't fire watches if this node was only copied because a
+     * descendent was changed. The modifieD_in_tx flag indicates the
+     * ones which were really changed.
+     */
+    if (n->modified_in_tx || n->deleted_in_tx) {
+        fire_watches(op, fire_parents);
+        n->modified_in_tx = false;
+    }
+    op->path[path_len] = '\0';
+
+    /* Deleted nodes really do get expunged when we commit */
+    return n->deleted_in_tx;
+}
+
 static int transaction_commit(XenstoreImplState *s, XsTransaction *tx)
 {
+    struct walk_op op;
+    XsNode **n;
+
     if (s->root_tx != tx->base_tx) {
         return EAGAIN;
     }
@@ -590,10 +710,18 @@ static int transaction_commit(XenstoreImplState *s, XsTransaction *tx)
     tx->root = NULL;
     s->root_tx = tx->tx_id;
 
+    init_walk_op(s, &op, XBT_NULL, tx->dom_id, "/", &n);
+    op.deleted_in_tx = false;
+    op.mutating = true;
+
     /*
-     * XX: Walk the new root and fire watches on any node which has a
+     * Walk the new root and fire watches on any node which has a
      * refcount of one (which is therefore unique to this transaction).
      */
+    if (s->root->children) {
+        g_hash_table_foreach_remove(s->root->children, tx_commit_walk, &op);
+    }
+
     return 0;
 }
 
diff --git a/tests/unit/test-xs-node.c b/tests/unit/test-xs-node.c
index 88ac71e83f..85012491a6 100644
--- a/tests/unit/test-xs-node.c
+++ b/tests/unit/test-xs-node.c
@@ -292,14 +292,21 @@ static void do_test_xs_node_tx(bool fail, bool commit)
     g_assert(!err);
     g_assert(!watches->len);
 
-    /* The transaction should fail */
+    /* Attempt to commit the transaction */
     err = xs_impl_transaction_end(s, DOMID_GUEST, tx_id, commit);
     if (commit && fail) {
         g_assert(err == EAGAIN);
     } else {
         g_assert(!err);
     }
-    g_assert(!watches->len);
+
+    if (commit && !fail) {
+        g_assert(!strcmp(watches->str,
+                         "some/relative/pathwatch"));
+        g_string_truncate(watches, 0);
+    } else {
+       g_assert(!watches->len);
+    }
 
     err = xs_impl_unwatch(s, DOMID_GUEST, "some", "watch",
                         watch_cb, watches);
@@ -337,6 +344,135 @@ static void test_xs_node_tx_succeed(void)
     do_test_xs_node_tx(false, true);
 }
 
+static void test_xs_node_tx_rm(void)
+{
+    XenstoreImplState *s = setup();
+    GString *watches = g_string_new(NULL);
+    GByteArray *data = g_byte_array_new();
+    unsigned int tx_id = XBT_NULL;
+    int err;
+
+    g_assert(s);
+
+    /* Set a watch */
+    err = xs_impl_watch(s, DOMID_GUEST, "some", "watch",
+                        watch_cb, watches);
+    g_assert(!err);
+    g_assert(watches->len == strlen("somewatch"));
+    g_assert(!strcmp(watches->str, "somewatch"));
+    g_string_truncate(watches, 0);
+
+    /* Write something */
+    err = write_str(s, DOMID_GUEST, XBT_NULL, "some/deep/dark/relative/path",
+                    "something");
+    g_assert(!err);
+    g_assert(!strcmp(watches->str,
+                     "some/deep/dark/relative/pathwatch"));
+    g_string_truncate(watches, 0);
+
+    /* Create a transaction */
+    err = xs_impl_transaction_start(s, DOMID_GUEST, &tx_id);
+    g_assert(!err);
+
+    /* Delete the tree in the transaction */
+    err = xs_impl_rm(s, DOMID_GUEST, tx_id, "some/deep/dark");
+    g_assert(!err);
+    g_assert(!watches->len);
+
+    err = xs_impl_read(s, DOMID_GUEST, XBT_NULL, "some/deep/dark/relative/path",
+                       data);
+    g_assert(!err);
+    g_assert(data->len == strlen("something"));
+    g_assert(!memcmp(data->data, "something", data->len));
+    g_byte_array_set_size(data, 0);
+
+    /* Commit the transaction */
+    err = xs_impl_transaction_end(s, DOMID_GUEST, tx_id, true);
+    g_assert(!err);
+
+    g_assert(!strcmp(watches->str, "some/deep/darkwatch"));
+    g_string_truncate(watches, 0);
+
+    /* Now the node is gone */
+    err = xs_impl_read(s, DOMID_GUEST, XBT_NULL, "some/deep/dark/relative/path",
+                       data);
+    g_assert(err == ENOENT);
+    g_byte_array_unref(data);
+
+    err = xs_impl_unwatch(s, DOMID_GUEST, "some", "watch",
+                        watch_cb, watches);
+    g_assert(!err);
+
+    g_string_free(watches, true);
+    xs_impl_delete(s);
+}
+
+static void test_xs_node_tx_resurrect(void)
+{
+    XenstoreImplState *s = setup();
+    GString *watches = g_string_new(NULL);
+    GByteArray *data = g_byte_array_new();
+    unsigned int tx_id = XBT_NULL;
+    int err;
+
+    g_assert(s);
+
+    /* Write something */
+    err = write_str(s, DOMID_GUEST, XBT_NULL, "some/deep/dark/relative/path",
+                    "something");
+    g_assert(!err);
+
+    /* This node will be wiped and resurrected */
+    err = write_str(s, DOMID_GUEST, XBT_NULL, "some/deep/dark",
+                    "foo");
+    g_assert(!err);
+
+    /* Set a watch */
+    err = xs_impl_watch(s, DOMID_GUEST, "some", "watch",
+                        watch_cb, watches);
+    g_assert(!err);
+    g_assert(watches->len == strlen("somewatch"));
+    g_assert(!strcmp(watches->str, "somewatch"));
+    g_string_truncate(watches, 0);
+
+    /* Create a transaction */
+    err = xs_impl_transaction_start(s, DOMID_GUEST, &tx_id);
+    g_assert(!err);
+
+    /* Delete the tree in the transaction */
+    err = xs_impl_rm(s, DOMID_GUEST, tx_id, "some/deep");
+    g_assert(!err);
+    g_assert(!watches->len);
+
+    /* Resurrect part of it */
+    err = write_str(s, DOMID_GUEST, tx_id, "some/deep/dark/different/path",
+                    "something");
+    g_assert(!err);
+
+    /* Commit the transaction */
+    err = xs_impl_transaction_end(s, DOMID_GUEST, tx_id, true);
+    g_assert(!err);
+
+    g_assert(!strcmp(watches->str,
+                     "some/deep/dark/different/pathwatch" /* lost data */
+                     "some/deep/dark/relativewatch" /* topmost deleted */
+                     "some/deep/darkwatch" /* lost data */));
+    g_string_truncate(watches, 0);
+
+    /* Now the node is gone */
+    err = xs_impl_read(s, DOMID_GUEST, XBT_NULL, "some/deep/dark/relative/path",
+                       data);
+    g_assert(err == ENOENT);
+    g_byte_array_unref(data);
+
+    err = xs_impl_unwatch(s, DOMID_GUEST, "some", "watch",
+                        watch_cb, watches);
+    g_assert(!err);
+
+    g_string_free(watches, true);
+    xs_impl_delete(s);
+}
+
 int main(int argc, char **argv)
 {
     g_test_init(&argc, &argv, NULL);
@@ -346,6 +482,8 @@ int main(int argc, char **argv)
     g_test_add_func("/xs_node/tx_abort", test_xs_node_tx_abort);
     g_test_add_func("/xs_node/tx_fail", test_xs_node_tx_fail);
     g_test_add_func("/xs_node/tx_succeed", test_xs_node_tx_succeed);
+    g_test_add_func("/xs_node/tx_rm", test_xs_node_tx_rm);
+    g_test_add_func("/xs_node/tx_resurrect", test_xs_node_tx_resurrect);
 
     return g_test_run();
 }
