diff --git a/src/compiler/codegen/index.js b/src/compiler/codegen/index.js
index ac7740500..3a0d20c9d 100644
--- a/src/compiler/codegen/index.js
+++ b/src/compiler/codegen/index.js
@@ -298,14 +298,18 @@ function genChildren (el: ASTElement, checkSkip?: boolean): string | void {
 function canSkipNormalization (children): boolean {
   for (let i = 0; i < children.length; i++) {
     const el: any = children[i]
-    if (el.for || el.tag === 'template' || el.tag === 'slot' ||
-      (el.if && el.ifConditions.some(c => c.tag === 'template'))) {
+    if (needsNormalization(el) ||
+        (el.if && el.ifConditions.some(c => needsNormalization(c.block)))) {
       return false
     }
   }
   return true
 }
 
+function needsNormalization (el) {
+  return el.for || el.tag === 'template' || el.tag === 'slot'
+}
+
 function genNode (node: ASTNode) {
   if (node.type === 1) {
     return genElement(node)
diff --git a/test/unit/features/directives/if.spec.js b/test/unit/features/directives/if.spec.js
index 69d751c17..458f1f924 100644
--- a/test/unit/features/directives/if.spec.js
+++ b/test/unit/features/directives/if.spec.js
@@ -141,7 +141,7 @@ describe('Directive v-if', () => {
     const vm = new Vue({
       template: `
         <div>
-          <span v-for="item,i in list" v-if="item.value">{{i}}</span>
+          <span v-for="(item, i) in list" v-if="item.value">{{i}}</span>
         </div>
       `,
       data: {
@@ -169,7 +169,7 @@ describe('Directive v-if', () => {
     const vm = new Vue({
       template: `
         <div>
-          <span v-for="item,i in list" v-if="item.value">hello</span>
+          <span v-for="(item, i) in list" v-if="item.value">hello</span>
           <span v-else>bye</span>
         </div>
       `,
@@ -194,6 +194,25 @@ describe('Directive v-if', () => {
     }).then(done)
   })
 
+  it('should work with v-for on v-else branch', done => {
+    const vm = new Vue({
+      template: `
+        <div>
+          <span v-if="false">hello</span>
+          <span v-else v-for="item in list">{{ item }}</span>
+        </div>
+      `,
+      data: {
+        list: [1, 2, 3]
+      }
+    }).$mount()
+    expect(vm.$el.textContent.trim()).toBe('123')
+    vm.list.reverse()
+    waitForUpdate(() => {
+      expect(vm.$el.textContent.trim()).toBe('321')
+    }).then(done)
+  })
+
   it('should work properly on component root', done => {
     const vm = new Vue({
       template: `