diff --git a/packages/templating/templating_tests.html b/packages/templating/templating_tests.html
index 0cfa76c5c0..d44420cd02 100644
--- a/packages/templating/templating_tests.html
+++ b/packages/templating/templating_tests.html
@@ -326,3 +326,23 @@
 <template name="test_type_casting">
 {{testTypeCasting 'true' 'false' true false 0 1 -1 10 -10 1asdf -1asdf}}
 </template>
+
+<!-- Test for issue #724 - template branches are labeled wrong -->
+
+<template name="test_template_trickylabels_a0">
+  {{#unless loading}}
+    {{> test_template_trickylabels_a1}}
+  {{/unless}}
+</template>
+
+<template name="test_template_trickylabels_a1">
+  {{#isolate}}
+    {{> test_template_trickylabels_a2}}
+    {{v}}
+  {{/isolate}}
+  <div>bar</div>
+</template>
+
+<template name="test_template_trickylabels_a2">
+  <div>foo</div>
+</template>
diff --git a/packages/templating/templating_tests.js b/packages/templating/templating_tests.js
index a43f58c60d..5c3d9717e5 100644
--- a/packages/templating/templating_tests.js
+++ b/packages/templating/templating_tests.js
@@ -1032,3 +1032,39 @@ Tinytest.add('templating - helper typecast Issue #617', function (test) {
       "[object]");
 });
 
+Tinytest.add("templating - tricky branch labels", function (test) {
+  // regression test for issue #724
+
+  var loading = ReactiveVar(true);
+  var v = ReactiveVar(1);
+
+  var x = [];
+
+  Template.test_template_trickylabels_a0.loading = function () {
+    return loading.get();
+  };
+
+  Template.test_template_trickylabels_a1.v = function () {
+    return v.get();
+  };
+
+  _.extend(Template.test_template_trickylabels_a2, {
+    created: function () { x.push('c'); },
+    rendered: function () { x.push('r'); },
+    destroyed: function () { x.push('d'); }
+  });
+
+  var div = OnscreenDiv(Meteor.render(Template.test_template_trickylabels_a0));
+  Meteor.flush();
+  loading.set(false);
+  Meteor.flush();
+  x.length = 0;
+
+  v.set(2);
+  Meteor.flush();
+  test.equal(x.join(''), 'r'); // no 'c' or 'd'
+  test.equal(div.html().replace(/\s+/g, ''), '<div>foo</div>2<div>bar</div>');
+
+  div.kill();
+  Meteor.flush();
+});