diff --git a/src/ng/directive/ngInclude.js b/src/ng/directive/ngInclude.js
index 90fd0b40ab40..f1c836f01a0c 100644
--- a/src/ng/directive/ngInclude.js
+++ b/src/ng/directive/ngInclude.js
@@ -15,8 +15,6 @@
  *
  * @param {string} ng-include|src angular expression evaluating to URL. If the source is a string constant,
  *                 make sure you wrap it in quotes, e.g. `src="'myPartialTemplate.html'"`.
- * @param {Scope=} [scope=new_child_scope] optional expression which evaluates to an
- *                 instance of angular.module.ng.$rootScope.Scope to set the HTML fragment to.
  * @param {string=} onload Expression to evaluate when a new partial is loaded.
  *
  * @param {string=} autoscroll Whether `ng-include` should call {@link angular.module.ng.$anchorScroll
@@ -78,8 +76,7 @@ var ngIncludeDirective = ['$http', '$templateCache', '$anchorScroll', '$compile'
   return {
     restrict: 'EA',
     compile: function(element, attr) {
-      var srcExp = attr.ngInclude  || attr.src,
-          scopeExp = attr.scope || '',
+      var srcExp = attr.ngInclude || attr.src,
           onloadExp = attr.onload || '',
           autoScrollExp = attr.autoscroll;
 
@@ -87,45 +84,40 @@ var ngIncludeDirective = ['$http', '$templateCache', '$anchorScroll', '$compile'
         var changeCounter = 0,
             childScope;
 
-        function incrementChange() { changeCounter++;}
-        scope.$watch(srcExp, incrementChange);
-        scope.$watch(function() {
-          var includeScope = scope.$eval(scopeExp);
-          if (includeScope) return includeScope.$id;
-        }, incrementChange);
-        scope.$watch(function() {return changeCounter;}, function(newChangeCounter) {
-           var src = scope.$eval(srcExp),
-               useScope = scope.$eval(scopeExp);
+        var clearContent = function() {
+          if (childScope) {
+            childScope.$destroy();
+            childScope = null;
+          }
+
+          element.html('');
+        };
+
+        scope.$watch(srcExp, function(src) {
+          var thisChangeId = ++changeCounter;
+
+          if (src) {
+            $http.get(src, {cache: $templateCache}).success(function(response) {
+              if (thisChangeId !== changeCounter) return;
 
-          function clearContent() {
-            // if this callback is still desired
-            if (newChangeCounter === changeCounter) {
               if (childScope) childScope.$destroy();
-              childScope = null;
-              element.html('');
-            }
-          }
+              childScope = scope.$new();
+
+              element.html(response);
+              $compile(element.contents())(childScope);
+
+              if (isDefined(autoScrollExp) && (!autoScrollExp || scope.$eval(autoScrollExp))) {
+                $anchorScroll();
+              }
 
-           if (src) {
-             $http.get(src, {cache: $templateCache}).success(function(response) {
-               // if this callback is still desired
-               if (newChangeCounter === changeCounter) {
-                 element.html(response);
-                 if (childScope) childScope.$destroy();
-                 childScope = useScope ? useScope : scope.$new();
-                 $compile(element.contents())(childScope);
-                 if (isDefined(autoScrollExp) && (!autoScrollExp || scope.$eval(autoScrollExp))) {
-                   $anchorScroll();
-                 }
-                 scope.$emit('$includeContentLoaded');
-                 scope.$eval(onloadExp);
-               }
-             }).error(clearContent);
-           } else {
-             clearContent();
-           }
+              scope.$emit('$includeContentLoaded');
+              scope.$eval(onloadExp);
+            }).error(function() {
+              if (thisChangeId === changeCounter) clearContent();
+            });
+          } else clearContent();
         });
       };
     }
-  }
+  };
 }];
diff --git a/test/ng/directive/ngIncludeSpec.js b/test/ng/directive/ngIncludeSpec.js
index ab63dd02a443..ae9454d6cec5 100644
--- a/test/ng/directive/ngIncludeSpec.js
+++ b/test/ng/directive/ngIncludeSpec.js
@@ -18,11 +18,10 @@ describe('ng-include', function() {
 
   it('should include on external file', inject(putIntoCache('myUrl', '{{name}}'),
       function($rootScope, $compile) {
-    element = jqLite('<ng:include src="url" scope="childScope"></ng:include>');
+    element = jqLite('<ng:include src="url"></ng:include>');
     jqLite(document.body).append(element);
     element = $compile(element)($rootScope);
-    $rootScope.childScope = $rootScope.$new();
-    $rootScope.childScope.name = 'misko';
+    $rootScope.name = 'misko';
     $rootScope.url = 'myUrl';
     $rootScope.$digest();
     expect(element.text()).toEqual('misko');
@@ -46,10 +45,9 @@ describe('ng-include', function() {
   it('should remove previously included text if a falsy value is bound to src', inject(
         putIntoCache('myUrl', '{{name}}'),
         function($rootScope, $compile) {
-    element = jqLite('<ng:include src="url" scope="childScope"></ng:include>');
+    element = jqLite('<ng:include src="url"></ng:include>');
     element = $compile(element)($rootScope);
-    $rootScope.childScope = $rootScope.$new();
-    $rootScope.childScope.name = 'igor';
+    $rootScope.name = 'igor';
     $rootScope.url = 'myUrl';
     $rootScope.$digest();
 
@@ -62,23 +60,6 @@ describe('ng-include', function() {
   }));
 
 
-  it('should allow this for scope', inject(putIntoCache('myUrl', '{{"abc"}}'),
-        function($rootScope, $compile) {
-    element = jqLite('<ng:include src="url" scope="this"></ng:include>');
-    element = $compile(element)($rootScope);
-    $rootScope.url = 'myUrl';
-    $rootScope.$digest();
-
-    // TODO(misko): because we are using scope==this, the eval gets registered
-    // during the flush phase and hence does not get called.
-    // I don't think passing 'this' makes sense. Does having scope on ng-include makes sense?
-    // should we make scope="this" illegal?
-    $rootScope.$digest();
-
-    expect(element.text()).toEqual('abc');
-  }));
-
-
   it('should fire $includeContentLoaded event after linking the content', inject(
       function($rootScope, $compile, $templateCache) {
     var contentLoadedSpy = jasmine.createSpy('content loaded').andCallFake(function() {
@@ -111,20 +92,33 @@ describe('ng-include', function() {
   }));
 
 
-  it('should destroy old scope', inject(putIntoCache('myUrl', 'my partial'),
-        function($rootScope, $compile) {
-    element = jqLite('<ng:include src="url"></ng:include>');
-    element = $compile(element)($rootScope);
+  it('should create child scope and destroy old one', inject(
+        function($rootScope, $compile, $httpBackend) {
+    $httpBackend.whenGET('url1').respond('partial {{$parent.url}}');
+    $httpBackend.whenGET('url2').respond(404);
 
-    expect($rootScope.$$childHead).toBeFalsy();
+    element = $compile('<ng:include src="url"></ng:include>')($rootScope);
+    expect(element.children().scope()).toBeFalsy();
 
-    $rootScope.url = 'myUrl';
+    $rootScope.url = 'url1';
+    $rootScope.$digest();
+    $httpBackend.flush();
+    expect(element.children().scope()).toBeTruthy();
+    expect(element.text()).toBe('partial url1');
+
+    $rootScope.url = 'url2';
+    $rootScope.$digest();
+    $httpBackend.flush();
+    expect(element.children().scope()).toBeFalsy();
+    expect(element.text()).toBe('');
+
+    $rootScope.url = 'url1';
     $rootScope.$digest();
-    expect($rootScope.$$childHead).toBeTruthy();
+    expect(element.children().scope()).toBeTruthy();
 
     $rootScope.url = null;
     $rootScope.$digest();
-    expect($rootScope.$$childHead).toBeFalsy();
+    expect(element.children().scope()).toBeFalsy();
   }));