diff --git a/src/compositor.c b/src/compositor.c
index cc8ffe28..6aeaaee7 100644
--- a/src/compositor.c
+++ b/src/compositor.c
@@ -303,6 +303,7 @@ weston_surface_create(struct weston_compositor *compositor)
 	wl_list_insert(&surface->geometry.transformation_list,
 		       &surface->transform.position.link);
 	weston_matrix_init(&surface->transform.position.matrix);
+	wl_list_init(&surface->geometry.child_list);
 	pixman_region32_init(&surface->transform.boundingbox);
 	surface->transform.dirty = 1;
 
@@ -625,6 +626,7 @@ weston_surface_update_transform_disable(struct weston_surface *surface)
 static int
 weston_surface_update_transform_enable(struct weston_surface *surface)
 {
+	struct weston_surface *parent = surface->geometry.parent;
 	struct weston_matrix *matrix = &surface->transform.matrix;
 	struct weston_matrix *inverse = &surface->transform.inverse;
 	struct weston_transform *tform;
@@ -640,6 +642,9 @@ weston_surface_update_transform_enable(struct weston_surface *surface)
 	wl_list_for_each(tform, &surface->geometry.transformation_list, link)
 		weston_matrix_multiply(matrix, &tform->matrix);
 
+	if (parent)
+		weston_matrix_multiply(matrix, &parent->transform.matrix);
+
 	if (weston_matrix_invert(inverse, matrix) < 0) {
 		/* Oops, bad total transformation, not invertible */
 		weston_log("error: weston_surface %p"
@@ -657,9 +662,14 @@ weston_surface_update_transform_enable(struct weston_surface *surface)
 WL_EXPORT void
 weston_surface_update_transform(struct weston_surface *surface)
 {
+	struct weston_surface *parent = surface->geometry.parent;
+
 	if (!surface->transform.dirty)
 		return;
 
+	if (parent)
+		weston_surface_update_transform(parent);
+
 	surface->transform.dirty = 0;
 
 	weston_surface_damage_below(surface);
@@ -672,7 +682,8 @@ weston_surface_update_transform(struct weston_surface *surface)
 	if (surface->geometry.transformation_list.next ==
 	    &surface->transform.position.link &&
 	    surface->geometry.transformation_list.prev ==
-	    &surface->transform.position.link) {
+	    &surface->transform.position.link &&
+	    !parent) {
 		weston_surface_update_transform_disable(surface);
 	} else {
 		if (weston_surface_update_transform_enable(surface) < 0)
@@ -687,7 +698,23 @@ weston_surface_update_transform(struct weston_surface *surface)
 WL_EXPORT void
 weston_surface_geometry_dirty(struct weston_surface *surface)
 {
+	struct weston_surface *child;
+
+	/*
+	 * The invariant: if surface->geometry.dirty, then all surfaces
+	 * in surface->geometry.child_list have geometry.dirty too.
+	 * Corollary: if not parent->geometry.dirty, then all ancestors
+	 * are not dirty.
+	 */
+
+	if (surface->transform.dirty)
+		return;
+
 	surface->transform.dirty = 1;
+
+	wl_list_for_each(child, &surface->geometry.child_list,
+			 geometry.parent_link)
+		weston_surface_geometry_dirty(child);
 }
 
 WL_EXPORT void
@@ -797,6 +824,40 @@ weston_surface_set_position(struct weston_surface *surface,
 	weston_surface_geometry_dirty(surface);
 }
 
+static void
+transform_parent_handle_parent_destroy(struct wl_listener *listener,
+				       void *data)
+{
+	struct weston_surface *surface =
+		container_of(listener, struct weston_surface,
+			     geometry.parent_destroy_listener);
+
+	weston_surface_set_transform_parent(surface, NULL);
+}
+
+WL_EXPORT void
+weston_surface_set_transform_parent(struct weston_surface *surface,
+				    struct weston_surface *parent)
+{
+	if (surface->geometry.parent) {
+		wl_list_remove(&surface->geometry.parent_destroy_listener.link);
+		wl_list_remove(&surface->geometry.parent_link);
+	}
+
+	surface->geometry.parent = parent;
+
+	surface->geometry.parent_destroy_listener.notify =
+		transform_parent_handle_parent_destroy;
+	if (parent) {
+		wl_signal_add(&parent->surface.resource.destroy_signal,
+			      &surface->geometry.parent_destroy_listener);
+		wl_list_insert(&parent->geometry.child_list,
+			       &surface->geometry.parent_link);
+	}
+
+	weston_surface_geometry_dirty(surface);
+}
+
 WL_EXPORT int
 weston_surface_is_mapped(struct weston_surface *surface)
 {
@@ -946,6 +1007,8 @@ destroy_surface(struct wl_resource *resource)
 	struct weston_compositor *compositor = surface->compositor;
 	struct weston_frame_callback *cb, *next;
 
+	assert(wl_list_empty(&surface->geometry.child_list));
+
 	if (weston_surface_is_mapped(surface))
 		weston_surface_unmap(surface);
 
@@ -973,6 +1036,8 @@ destroy_surface(struct wl_resource *resource)
 	wl_list_for_each_safe(cb, next, &surface->frame_callback_list, link)
 		wl_resource_destroy(&cb->resource);
 
+	weston_surface_set_transform_parent(surface, NULL);
+
 	free(surface);
 }
 
diff --git a/src/compositor.h b/src/compositor.h
index f3e54d90..a38559ec 100644
--- a/src/compositor.h
+++ b/src/compositor.h
@@ -388,6 +388,11 @@ struct weston_region {
  * If you want to apply a transformation in local coordinates, add your
  * weston_transform to the head of the list. If you want to apply a
  * transformation in global coordinates, add it to the tail of the list.
+ *
+ * If surface->geometry.parent is set, the total transformation of this
+ * surface will be the parent's total transformation and this transformation
+ * combined:
+ *    Mparent * Mn * ... * M2 * M1
  */
 
 struct weston_surface {
@@ -414,6 +419,12 @@ struct weston_surface {
 
 		/* struct weston_transform */
 		struct wl_list transformation_list;
+
+		/* managed by weston_surface_set_transform_parent() */
+		struct weston_surface *parent;
+		struct wl_listener parent_destroy_listener;
+		struct wl_list child_list; /* geometry.parent_link */
+		struct wl_list parent_link;
 	} geometry;
 
 	/* State derived from geometry state, read-only.
@@ -689,6 +700,10 @@ void
 weston_surface_set_position(struct weston_surface *surface,
 			    float x, float y);
 
+void
+weston_surface_set_transform_parent(struct weston_surface *surface,
+				    struct weston_surface *parent);
+
 int
 weston_surface_is_mapped(struct weston_surface *surface);
 
diff --git a/src/shell.c b/src/shell.c
index 26f0d605..565d0e26 100644
--- a/src/shell.c
+++ b/src/shell.c
@@ -190,7 +190,6 @@ struct shell_surface {
 	struct {
 		struct wl_pointer_grab grab;
 		int32_t x, y;
-		struct weston_transform parent_transform;
 		int32_t initial_up;
 		struct wl_seat *seat;
 		uint32_t serial;
@@ -1909,35 +1908,11 @@ shell_map_popup(struct shell_surface *shsurf)
 	struct weston_surface *es = shsurf->surface;
 	struct weston_surface *parent = shsurf->parent;
 
-	/* Remove the old transform. We don't want to add it twice
-	 * otherwise Weston will go into an infinite loop when going
-	 * through the transforms. */
-	if (!wl_list_empty(&shsurf->popup.parent_transform.link)) {
-		wl_list_remove(&shsurf->popup.parent_transform.link);
-		wl_list_init(&shsurf->popup.parent_transform.link);
-	}
-
 	es->output = parent->output;
 	shsurf->popup.grab.interface = &popup_grab_interface;
 
-	weston_surface_update_transform(parent);
-	if (parent->transform.enabled) {
-		shsurf->popup.parent_transform.matrix =
-			parent->transform.matrix;
-	} else {
-		/* construct x, y translation matrix */
-		weston_matrix_init(&shsurf->popup.parent_transform.matrix);
-		shsurf->popup.parent_transform.matrix.type =
-			WESTON_MATRIX_TRANSFORM_TRANSLATE;
-		shsurf->popup.parent_transform.matrix.d[12] =
-			parent->geometry.x;
-		shsurf->popup.parent_transform.matrix.d[13] =
-			parent->geometry.y;
-	}
-	wl_list_insert(es->geometry.transformation_list.prev,
-		       &shsurf->popup.parent_transform.link);
-
 	shsurf->popup.initial_up = 0;
+	weston_surface_set_transform_parent(es, parent);
 	weston_surface_set_position(es, shsurf->popup.x, shsurf->popup.y);
 	weston_surface_update_transform(es);
 
@@ -2088,7 +2063,6 @@ create_shell_surface(void *shell, struct weston_surface *surface,
 	weston_matrix_init(&shsurf->rotation.rotation);
 
 	wl_list_init(&shsurf->workspace_transform.link);
-	wl_list_init(&shsurf->popup.parent_transform.link);
 
 	shsurf->type = SHELL_SURFACE_NONE;
 	shsurf->next_type = SHELL_SURFACE_NONE;