Index: modeshape-graph/src/main/java/org/modeshape/graph/session/GraphSession.java
===================================================================
--- modeshape-graph/src/main/java/org/modeshape/graph/session/GraphSession.java	(revision 2125)
+++ modeshape-graph/src/main/java/org/modeshape/graph/session/GraphSession.java	(working copy)
@@ -1645,7 +1645,10 @@ public class GraphSession<Payload, PropertyPayload> {
                 Location actualLocation = persistentNode.getLocation();
                 if (!this.location.isSame(actualLocation)) {
                     // The actual location is changed, so update it ...
-                    this.originalLocation = this.location = actualLocation;
+                    this.originalLocation = actualLocation;
+                    // However, the location of the node needs to be a function of the parent node's location,
+                    // which has already been loaded by this session ...
+                    this.location = actualLocation.with(this.location.getPath()); // copy the ID props, if any
                 }
                 // Update the persistent information ...
                 cache.nodeOperations.materialize(persistentNode, this);
@@ -1655,7 +1658,10 @@ public class GraphSession<Payload, PropertyPayload> {
                 Location actualLocation = subgraph.getLocation();
                 if (!this.location.isSame(actualLocation)) {
                     // The actual location is changed, so update it ...
-                    this.originalLocation = this.location = actualLocation;
+                    this.originalLocation = actualLocation;
+                    // However, the location of the node needs to be a function of the parent node's location,
+                    // which has already been loaded by this session ...
+                    this.location = actualLocation.with(this.location.getPath()); // copy the ID props, if any
                 }
                 // Update the persistent information ...
                 cache.nodeOperations.materialize(subgraph.getRoot(), this);
Index: modeshape-jcr/src/main/java/org/modeshape/jcr/SessionCache.java
===================================================================
--- modeshape-jcr/src/main/java/org/modeshape/jcr/SessionCache.java	(revision 2125)
+++ modeshape-jcr/src/main/java/org/modeshape/jcr/SessionCache.java	(working copy)
@@ -1408,7 +1408,7 @@ class SessionCache {
 
                 // Update the location of the JcrNode object...
                 Path newPath = existingChild.getPath();
-                existingChild.getPayload().getJcrNode().setLocation(existingChild.getLocation().with(newPath));
+                setNewLocation(existingChild, newPath);
 
                 return existingChild;
             } catch (ValidationException e) {
@@ -1420,6 +1420,22 @@ class SessionCache {
             }
         }
 
+        private void setNewLocation( Node<JcrNodePayload, JcrPropertyPayload> node,
+                                     Path newPath ) {
+            AbstractJcrNode jcrNode = node.getPayload().getJcrNode(false);
+            if (jcrNode != null) {
+                // The JCR Node object has been cached, so update the location ...
+                node.getPayload().getJcrNode().setLocation(node.getLocation().with(newPath));
+
+                // Now update the location on the cached children of that moved node ...
+                for (Node<JcrNodePayload, JcrPropertyPayload> child : node.getChildren()) {
+                    if (!child.isLoaded()) continue;
+                    Path newChildPath = pathFactory.create(newPath, child.getSegment());
+                    setNewLocation(child, newChildPath);
+                }
+            }
+        }
+
         public void addMixin( JcrNodeType mixinCandidateType ) throws javax.jcr.ValueFormatException, RepositoryException {
             try {
                 PropertyInfo<JcrPropertyPayload> existingMixinProperty = node.getProperty(JcrLexicon.MIXIN_TYPES);
@@ -3091,6 +3107,10 @@ class SessionCache {
             return this.nodeDefinitionId;
         }
 
+        public AbstractJcrNode getJcrNode( boolean loadIfMissing ) {
+            return loadIfMissing ? getJcrNode() : jcrNode.get();
+        }
+
         /**
          * Get the JCR node instance.
          * 
Index: modeshape-jcr/src/test/java/org/modeshape/jcr/MoveTest.java
new file mode 100644
===================================================================
--- /dev/null	(revision 2125)
+++ modeshape-jcr/src/test/java/org/modeshape/jcr/MoveTest.java	(working copy)
@@ -0,0 +1,43 @@
+/*
+ * ModeShape (http://www.modeshape.org)
+ * See the COPYRIGHT.txt file distributed with this work for information
+ * regarding copyright ownership.  Some portions may be licensed
+ * to Red Hat, Inc. under one or more contributor license agreements.
+ * See the AUTHORS.txt file in the distribution for a full listing of 
+ * individual contributors.
+ *
+ * ModeShape is free software. Unless otherwise indicated, all code in ModeShape
+ * is licensed to you under the terms of the GNU Lesser General Public License as
+ * published by the Free Software Foundation; either version 2.1 of
+ * the License, or (at your option) any later version.
+ * 
+ * ModeShape is distributed in the hope that it will be useful,
+ * but WITHOUT ANY WARRANTY; without even the implied warranty of
+ * MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the GNU
+ * Lesser General Public License for more details.
+ *
+ * You should have received a copy of the GNU Lesser General Public
+ * License along with this software; if not, write to the Free
+ * Software Foundation, Inc., 51 Franklin St, Fifth Floor, Boston, MA
+ * 02110-1301 USA, or see the FSF site: http://www.fsf.org.
+ */
+package org.modeshape.jcr;
+
+import javax.jcr.Node;
+import javax.jcr.RepositoryException;
+import org.apache.jackrabbit.test.AbstractJCRTest;
+import org.modeshape.common.FixFor;
+
+public class MoveTest extends AbstractJCRTest {
+
+    @FixFor( "MODE-851" )
+    public void testMoveNode() throws RepositoryException {
+        testRootNode.addNode("test1").addNode("content");
+        // Test fails only with this save
+        superuser.save();
+        Node node1 = testRootNode.getNode("test1");
+        superuser.move(node1.getPath(), testRootNode.getPath() + "/test2");
+        Node content = node1.getNode("content");
+        assertEquals(node1.getPath() + "/content", content.getPath());
+    }
+}