diff --git a/tools/bundler.js b/tools/bundler.js
index 8bbb9bb180..4433e62aca 100644
--- a/tools/bundler.js
+++ b/tools/bundler.js
@@ -1452,6 +1452,27 @@ var writeFile = function (file, builder) {
   builder.write(file.targetPath, { data: file.contents() });
 };
 
+// Writes a target a path in 'programs'
+var writeTargetToPath = function (name, target, outputPath, options) {
+  var builder = new Builder({
+    outputPath: path.join(outputPath, 'programs', name),
+    symlink: options.includeNodeModulesSymlink
+  });
+
+  var relControlFilePath =
+    target.write(builder, {
+      includeNodeModulesSymlink: options.includeNodeModulesSymlink,
+      getRelativeTargetPath: options.getRelativeTargetPath });
+
+  builder.complete();
+
+  return {
+    name: name,
+    arch: target.mostCompatibleArch(),
+    path: path.join('programs', name, relControlFilePath)
+  };
+};
+
 ///////////////////////////////////////////////////////////////////////////////
 // writeSiteArchive
 ///////////////////////////////////////////////////////////////////////////////
@@ -1495,51 +1516,6 @@ var writeSiteArchive = function (targets, outputPath, options) {
       meteorRelease: options.releaseName
     };
 
-    // Pick a path in the bundle for each target
-    var paths = {};
-    _.each(targets, function (target, name) {
-      var p = path.join('programs', name);
-      builder.reserve(p, { directory: true });
-      paths[name] = p;
-    });
-
-    // Hack to let servers find relative paths to clients. Should find
-    // another solution eventually (probably some kind of mount
-    // directive that mounts the client bundle in the server at runtime)
-    var getRelativeTargetPath = function (options) {
-      var pathForTarget = function (target) {
-        var name;
-        _.each(targets, function (t, n) {
-          if (t === target)
-            name = n;
-        });
-        if (! name)
-          throw new Error("missing target?");
-
-        if (! (name in paths))
-          throw new Error("missing target path?");
-
-        return paths[name];
-      };
-
-      return path.relative(pathForTarget(options.relativeTo),
-                           pathForTarget(options.forTarget));
-    };
-
-    // Write out each target
-    _.each(targets, function (target, name) {
-      var relControlFilePath =
-        target.write(builder.enter(paths[name]), {
-          includeNodeModulesSymlink: options.includeNodeModulesSymlink,
-          getRelativeTargetPath: getRelativeTargetPath });
-
-      json.programs.push({
-        name: name,
-        arch: target.mostCompatibleArch(),
-        path: path.join(paths[name], relControlFilePath)
-      });
-    });
-
     // Tell Galaxy what version of the dependency kit we're using, so
     // it can load the right modules. (Include this even if we copied
     // or symlinked a node_modules, since that's probably enough for
@@ -1589,6 +1565,10 @@ var writeSiteArchive = function (targets, outputPath, options) {
       }
     });
 
+    _.each(targets, function (target, name) {
+      json.programs.push(writeTargetToPath(name, target, builder.buildPath, options));
+    });
+
     // We did it!
     builder.complete();
 
@@ -1750,9 +1730,11 @@ exports.bundle = function (options) {
       targets.client = client;
 
       // Server
-      var server = options.cachedServerTarget || makeServerTarget(app, client);
-      server.clientTarget = client;
-      targets.server = server;
+      if (! options.hasCachedBundle) {
+        var server = makeServerTarget(app, client);
+        server.clientTarget = client;
+        targets.server = server;
+      }
     }
 
     // Pick up any additional targets in /programs
@@ -1902,15 +1884,47 @@ exports.bundle = function (options) {
     if (! (controlProgram in targets))
       controlProgram = undefined;
 
+
+    // Hack to let servers find relative paths to clients. Should find
+    // another solution eventually (probably some kind of mount
+    // directive that mounts the client bundle in the server at runtime)
+    var getRelativeTargetPath = function (options) {
+      var pathForTarget = function (target) {
+        var name;
+        _.each(targets, function (t, n) {
+          if (t === target)
+            name = n;
+        });
+        if (! name)
+          throw new Error("missing target?");
+        return path.join('programs', name);
+      };
+
+      return path.relative(pathForTarget(options.relativeTo),
+                           pathForTarget(options.forTarget));
+    };
+
     // Write to disk
-    starResult = writeSiteArchive(targets, outputPath, {
+    var writeOptions = {
       includeNodeModulesSymlink: includeNodeModulesSymlink,
       builtBy: builtBy,
       controlProgram: controlProgram,
-      releaseName: releaseName
-    });
-    serverWatchSet.merge(starResult.serverWatchSet);
-    clientWatchSet.merge(starResult.clientWatchSet);
+      releaseName: releaseName,
+      getRelativeTargetPath: getRelativeTargetPath
+    };
+
+    if (options.hasCachedBundle) {
+      // XXX If we already have a cached bundle, just recreate the new targets.
+      // This might make the contents of "star.json" out of date.
+      _.each(targets, function (target, name) {
+        writeTargetToPath(name, target, outputPath, options);
+        clientWatchSet.merge(target.getWatchSet());
+      });
+    } else {
+      starResult = writeSiteArchive(targets, outputPath, writeOptions);
+      serverWatchSet.merge(starResult.serverWatchSet);
+      clientWatchSet.merge(starResult.clientWatchSet);
+    }
 
     success = true;
   });
@@ -1922,8 +1936,7 @@ exports.bundle = function (options) {
     errors: success ? false : messages,
     serverWatchSet: serverWatchSet,
     clientWatchSet: clientWatchSet,
-    starManifest: starResult && starResult.starManifest,
-    serverTarget: targets.server
+    starManifest: starResult && starResult.starManifest
   };
 };
 
diff --git a/tools/run-app.js b/tools/run-app.js
index 0a52320191..51838dd87e 100644
--- a/tools/run-app.js
+++ b/tools/run-app.js
@@ -423,7 +423,7 @@ _.extend(AppRunner.prototype, {
 
     // Cache the server target because the server will not change inside
     // a single invocation of _runOnce().
-    var cachedServerTarget = null;
+    var cachedBundle;
     var bundleApp = function () {
       if (! self.firstRun)
         packageCache.packageCache.refresh(true); // pick up changes to packages
@@ -432,10 +432,17 @@ _.extend(AppRunner.prototype, {
         outputPath: bundlePath,
         includeNodeModulesSymlink: true,
         buildOptions: self.buildOptions,
-        cachedServerTarget: cachedServerTarget
+        hasCachedBundle: !! cachedBundle
       });
 
-      cachedServerTarget = bundle.serverTarget;
+      // Overwrite the null elements in the new bundle with the elements from
+      // the cached bundle. However, we make sure to keep the serverWatchSet
+      // from the original cached bundle.
+      if (cachedBundle) {
+        bundle.serverWatchSet = cachedBundle.serverWatchSet;
+      }
+      cachedBundle = _.defaults(bundle, cachedBundle);
+
       return bundle;
     };
 
diff --git a/tools/tests/apps/hot-code-push-test/hot-code-push-test.js b/tools/tests/apps/hot-code-push-test/hot-code-push-test.js
index 3b37107e9c..c1f89ef574 100644
--- a/tools/tests/apps/hot-code-push-test/hot-code-push-test.js
+++ b/tools/tests/apps/hot-code-push-test/hot-code-push-test.js
@@ -9,6 +9,8 @@ if (Meteor.isServer) {
 
   Meteor.methods({
     clientLoad: function (jsVar) {
+      // Make sure that the process still has the correct working directories.
+      process.cwd();
       console.log("client connected: " + clientConnections++);
       console.log("jsVar: " + jsVar);
     }