diff --git a/NEWS b/NEWS
index 10da3844..242f0688 100644
--- a/NEWS
+++ b/NEWS
@@ -16,6 +16,8 @@ NEWS ( CHANGELOG and HISTORY )                                     HTMLPurifier
   entities, even if target encoding is UTF-8.
 ! Added support for 'scope' attribute on tables.
 ! Added %HTML.TargetBlank, which adds target="blank" to all outgoing links.
+! Properly handle sub-lists directly nested inside of lists in
+  a standards compliant way, by moving them into the preceding <li>
 - Color keywords are now case insensitive.  Thanks Yzmir Ramirez
   <yramirez-htmlpurifier@adicio.com> for reporting.
 - Explicitly initialize anonModule variable to null.
diff --git a/library/HTMLPurifier.includes.php b/library/HTMLPurifier.includes.php
index 58b66205..e44ab1b3 100644
--- a/library/HTMLPurifier.includes.php
+++ b/library/HTMLPurifier.includes.php
@@ -135,6 +135,7 @@ require 'HTMLPurifier/AttrTransform/Textarea.php';
 require 'HTMLPurifier/ChildDef/Chameleon.php';
 require 'HTMLPurifier/ChildDef/Custom.php';
 require 'HTMLPurifier/ChildDef/Empty.php';
+require 'HTMLPurifier/ChildDef/List.php';
 require 'HTMLPurifier/ChildDef/Required.php';
 require 'HTMLPurifier/ChildDef/Optional.php';
 require 'HTMLPurifier/ChildDef/StrictBlockquote.php';
diff --git a/library/HTMLPurifier.safe-includes.php b/library/HTMLPurifier.safe-includes.php
index 344a7128..d2a11792 100644
--- a/library/HTMLPurifier.safe-includes.php
+++ b/library/HTMLPurifier.safe-includes.php
@@ -129,6 +129,7 @@ require_once $__dir . '/HTMLPurifier/AttrTransform/Textarea.php';
 require_once $__dir . '/HTMLPurifier/ChildDef/Chameleon.php';
 require_once $__dir . '/HTMLPurifier/ChildDef/Custom.php';
 require_once $__dir . '/HTMLPurifier/ChildDef/Empty.php';
+require_once $__dir . '/HTMLPurifier/ChildDef/List.php';
 require_once $__dir . '/HTMLPurifier/ChildDef/Required.php';
 require_once $__dir . '/HTMLPurifier/ChildDef/Optional.php';
 require_once $__dir . '/HTMLPurifier/ChildDef/StrictBlockquote.php';
diff --git a/library/HTMLPurifier/ChildDef/List.php b/library/HTMLPurifier/ChildDef/List.php
new file mode 100644
index 00000000..cdaa2893
--- /dev/null
+++ b/library/HTMLPurifier/ChildDef/List.php
@@ -0,0 +1,120 @@
+<?php
+
+/**
+ * Definition for list containers ul and ol.
+ */
+class HTMLPurifier_ChildDef_List extends HTMLPurifier_ChildDef
+{
+    public $type = 'list';
+    // lying a little bit, so that we can handle ul and ol ourselves
+    // XXX: This whole business with 'wrap' is all a bit unsatisfactory
+    public $elements = array('li' => true, 'ul' => true, 'ol' => true);
+    public function validateChildren($tokens_of_children, $config, $context) {
+        // Flag for subclasses
+        $this->whitespace = false;
+
+        // if there are no tokens, delete parent node
+        if (empty($tokens_of_children)) return false;
+
+        // the new set of children
+        $result = array();
+
+        // current depth into the nest
+        $nesting = 0;
+
+        // a little sanity check to make sure it's not ALL whitespace
+        $all_whitespace = true;
+
+        $seen_li = false;
+        $need_close_li = false;
+
+        foreach ($tokens_of_children as $token) {
+            if (!empty($token->is_whitespace)) {
+                $result[] = $token;
+                continue;
+            }
+            $all_whitespace = false; // phew, we're not talking about whitespace
+
+            if ($nesting == 1 && $need_close_li) {
+                $result[] = new HTMLPurifier_Token_End('li');
+                $nesting--;
+                $need_close_li = false;
+            }
+
+            $is_child = ($nesting == 0);
+
+            if ($token instanceof HTMLPurifier_Token_Start) {
+                $nesting++;
+            } elseif ($token instanceof HTMLPurifier_Token_End) {
+                $nesting--;
+            }
+
+            if ($is_child) {
+                if ($token->name === 'li') {
+                    // good
+                    $seen_li = true;
+                } elseif ($token->name === 'ul' || $token->name === 'ol') {
+                    // we want to tuck this into the previous li
+                    $need_close_li = true;
+                    $nesting++;
+                    if (!$seen_li) {
+                        // create a new li element
+                        $result[] = new HTMLPurifier_Token_Start('li');
+                    } else {
+                        // backtrack until </li> found
+                        while(true) {
+                            $t = array_pop($result);
+                            if ($t instanceof HTMLPurifier_Token_End) {
+                                // XXX actually, these invariants could very plausibly be violated
+                                // if we are doing silly things with modifying the set of allowed elements.
+                                // FORTUNATELY, it doesn't make a difference, since the allowed
+                                // elements are hard-coded here!
+                                if ($t->name !== 'li') {
+                                    trigger_error("Only li present invariant violated in List ChildDef", E_USER_ERROR);
+                                    return false;
+                                }
+                                break;
+                            } elseif ($t instanceof HTMLPurifier_Token_Empty) { // bleagh
+                                if ($t->name !== 'li') {
+                                    trigger_error("Only li present invariant violated in List ChildDef", E_USER_ERROR);
+                                    return false;
+                                }
+                                // XXX this should have a helper for it...
+                                $result[] = new HTMLPurifier_Token_Start('li', $t->attr, $t->line, $t->col, $t->armor);
+                                break;
+                            } else {
+                                if (!$t->is_whitespace) {
+                                    trigger_error("Only whitespace present invariant violated in List ChildDef", E_USER_ERROR);
+                                    return false;
+                                }
+                            }
+                        }
+                    }
+                } else {
+                    // start wrapping (this doesn't precisely mimic
+                    // browser behavior, but what browsers do is kind of
+                    // hard to mimic in a standards compliant way
+                    // XXX Actually, this has no impact in practice,
+                    // because this gets handled earlier. Arguably,
+                    // we should rip out all of that processing
+                    $result[] = new HTMLPurifier_Token_Start('li');
+                    $nesting++;
+                    $seen_li = true;
+                    $need_close_li = true;
+                }
+            }
+            $result[] = $token;
+        }
+        if ($need_close_li) {
+            $result[] = new HTMLPurifier_Token_End('li');
+        }
+        if (empty($result)) return false;
+        if ($all_whitespace) {
+            return false;
+        }
+        if ($tokens_of_children == $result) return true;
+        return $result;
+    }
+}
+
+// vim: et sw=4 sts=4
diff --git a/library/HTMLPurifier/HTMLModule/List.php b/library/HTMLPurifier/HTMLModule/List.php
index 74d4522f..79ccefaf 100644
--- a/library/HTMLPurifier/HTMLModule/List.php
+++ b/library/HTMLPurifier/HTMLModule/List.php
@@ -20,10 +20,16 @@ class HTMLPurifier_HTMLModule_List extends HTMLPurifier_HTMLModule
     public $content_sets = array('Flow' => 'List');
 
     public function setup($config) {
-        $ol = $this->addElement('ol', 'List', 'Required: li', 'Common');
-        $ol->wrap = "li";
-        $ul = $this->addElement('ul', 'List', 'Required: li', 'Common');
-        $ul->wrap = "li";
+        $ol = $this->addElement('ol', 'List', new HTMLPurifier_ChildDef_List(), 'Common');
+        $ul = $this->addElement('ul', 'List', new HTMLPurifier_ChildDef_List(), 'Common');
+        // XXX The wrap attribute is handled by MakeWellFormed.  This is all
+        // quite unsatisfactory, because we generated this
+        // *specifically* for lists, and now a big chunk of the handling
+        // is done properly by the List ChildDef.  So actually, we just
+        // want enough information to make autoclosing work properly,
+        // and then hand off the tricky stuff to the ChildDef.
+        $ol->wrap = 'li';
+        $ul->wrap = 'li';
         $this->addElement('dl', 'List', 'Required: dt | dd', 'Common');
 
         $this->addElement('li', false, 'Flow', 'Common');
diff --git a/tests/HTMLPurifier/ChildDef/ListTest.php b/tests/HTMLPurifier/ChildDef/ListTest.php
new file mode 100644
index 00000000..02dcab0f
--- /dev/null
+++ b/tests/HTMLPurifier/ChildDef/ListTest.php
@@ -0,0 +1,50 @@
+<?php
+
+class HTMLPurifier_ChildDef_ListTest extends HTMLPurifier_ChildDefHarness
+{
+
+    function setUp() {
+        parent::setUp();
+        $this->obj = new HTMLPurifier_ChildDef_List();
+    }
+
+    function testEmptyInput() {
+        $this->assertResult('', false);
+    }
+
+    function testSingleLi() {
+        $this->assertResult('<li />');
+    }
+
+    function testSomeLi() {
+        $this->assertResult('<li>asdf</li><li />');
+    }
+
+    function testIllegal() {
+        // XXX actually this never gets triggered in practice
+        $this->assertResult('<li /><b />', '<li /><li><b /></li>');
+    }
+
+    function testOlAtBeginning() {
+        $this->assertResult('<ol />', '<li><ol /></li>');
+    }
+
+    function testOlAtBeginningWithOtherJunk() {
+        $this->assertResult('<ol /><li />', '<li><ol /></li><li />');
+    }
+
+    function testOlInMiddle() {
+        $this->assertResult('<li>Foo</li><ol><li>Bar</li></ol>', '<li>Foo<ol><li>Bar</li></ol></li>');
+    }
+
+    function testMultipleOl() {
+        $this->assertResult('<li /><ol /><ol />', '<li><ol /><ol /></li>');
+    }
+
+    function testUlAtBeginning() {
+        $this->assertResult('<ul />', '<li><ul /></li>');
+    }
+
+}
+
+// vim: et sw=4 sts=4
diff --git a/tests/HTMLPurifier/HTMLT/list-nesting.htmlt b/tests/HTMLPurifier/HTMLT/list-nesting.htmlt
new file mode 100644
index 00000000..22ebf605
--- /dev/null
+++ b/tests/HTMLPurifier/HTMLT/list-nesting.htmlt
@@ -0,0 +1,5 @@
+--HTML--
+<ul><li>Sublist 1</li><ul><li>Bullet</li></ul></ul>
+--EXPECT--
+<ul><li>Sublist 1<ul><li>Bullet</li></ul></li></ul>
+--# vim: et sw=4 sts=4
diff --git a/tests/HTMLPurifier/Strategy/FixNestingTest.php b/tests/HTMLPurifier/Strategy/FixNestingTest.php
index 7bbc53a5..9394352e 100644
--- a/tests/HTMLPurifier/Strategy/FixNestingTest.php
+++ b/tests/HTMLPurifier/Strategy/FixNestingTest.php
@@ -35,10 +35,17 @@ class HTMLPurifier_Strategy_FixNestingTest extends HTMLPurifier_StrategyHarness
         $this->assertResult('<ul></ul>', '');
     }
 
-    function testRemoveIllegalPCDATA() {
+    function testListHandleIllegalPCDATA() {
         $this->assertResult(
             '<ul>Illegal text<li>Legal item</li></ul>',
-            '<ul><li>Legal item</li></ul>'
+            '<ul><li>Illegal text</li><li>Legal item</li></ul>'
+        );
+    }
+
+    function testRemoveIllegalPCDATA() {
+        $this->assertResult(
+            '<table><tr>Illegal text<td></td></tr></table>',
+            '<table><tr><td></td></tr></table>'
         );
     }
 
diff --git a/tests/HTMLPurifier/Strategy/MakeWellFormedTest.php b/tests/HTMLPurifier/Strategy/MakeWellFormedTest.php
index 75ee646e..c6d775c5 100644
--- a/tests/HTMLPurifier/Strategy/MakeWellFormedTest.php
+++ b/tests/HTMLPurifier/Strategy/MakeWellFormedTest.php
@@ -119,21 +119,21 @@ class HTMLPurifier_Strategy_MakeWellFormedTest extends HTMLPurifier_StrategyHarn
     function testNestedOl() {
         $this->assertResult(
             '<ol><ol><li>foo</li></ol></ol>',
-            '<ol><li><ol><li>foo</li></ol></li></ol>'
+            '<ol><ol><li>foo</li></ol></ol>'
         );
     }
 
     function testNestedUl() {
         $this->assertResult(
             '<ul><ul><li>foo</li></ul></ul>',
-            '<ul><li><ul><li>foo</li></ul></li></ul>'
+            '<ul><ul><li>foo</li></ul></ul>'
         );
     }
 
     function testNestedOlWithStrangeEnding() {
         $this->assertResult(
             '<ol><li><ol><ol><li>foo</li></ol></li><li>foo</li></ol>',
-            '<ol><li><ol><li><ol><li>foo</li></ol></li><li>foo</li></ol></li></ol>'
+            '<ol><li><ol><ol><li>foo</li></ol></ol></li><li>foo</li></ol>'
         );
     }