diff --git a/src/ng/compile.js b/src/ng/compile.js
index 7ff234fe1c33..eff553c6b9b7 100644
--- a/src/ng/compile.js
+++ b/src/ng/compile.js
@@ -1896,6 +1896,7 @@ function $CompileProvider($provide, $$sanitizeUriProvider) {
               case '@':
                 attrs.$observe(attrName, function(value) {
                   isolateBindingContext[scopeName] = value;
+                  isolateScope.$setDirty();
                 });
                 attrs.$$observers[attrName].$$scope = scope;
                 if (attrs[attrName]) {
@@ -1929,6 +1930,7 @@ function $CompileProvider($provide, $$sanitizeUriProvider) {
                     if (!compare(parentValue, lastValue)) {
                       // parent changed and it has precedence
                       isolateBindingContext[scopeName] = parentValue;
+                      isolateScope.$setDirty();
                     } else {
                       // if the parent can be assigned then do so
                       parentSet(scope, parentValue = isolateBindingContext[scopeName]);
diff --git a/src/ng/rootScope.js b/src/ng/rootScope.js
index d06abfc248b3..30bda79450ca 100644
--- a/src/ng/rootScope.js
+++ b/src/ng/rootScope.js
@@ -137,6 +137,7 @@ function $RootScopeProvider() {
       this.$$listeners = {};
       this.$$listenerCount = {};
       this.$$isolateBindings = null;
+      this.$$dirty = false;
     }
 
     /**
@@ -202,6 +203,7 @@ function $RootScopeProvider() {
         if (isolate) {
           child = new Scope();
           child.$root = this.$root;
+          child.$$dirty = true;
         } else {
           // Only create a child scope class if somebody asks for one,
           // but cache it to allow the VM to optimize lookups.
@@ -241,6 +243,13 @@ function $RootScopeProvider() {
         }
       },
 
+      $setDirty: function() {
+        if (!this.hasOwnProperty("$$isolateBindings"))
+          throw 'Must be isolated scope.';
+
+        this.$$dirty = true;
+      },
+
       /**
        * @ngdoc method
        * @name $rootScope.Scope#$watch
@@ -722,6 +731,7 @@ function $RootScopeProvider() {
             next, current, target = this,
             watchLog = [],
             logIdx, logMsg, asyncTask;
+        this.$$dirty = true;
 
         beginPhase('$digest');
         // Check for changes to browser url that happened in sync before the call to $digest
@@ -752,7 +762,9 @@ function $RootScopeProvider() {
 
           traverseScopesLoop:
           do { // "traverse the scopes" loop
-            if ((watchers = current.$$watchers)) {
+            var skip = current.$$isolateBindings && !current.$$dirty && !current.$$transcluded;
+            current.$$dirty = false;
+            if (!skip && (watchers = current.$$watchers)) {
               // process our watches
               length = watchers.length;
               while (length--) {
@@ -1031,6 +1043,7 @@ function $RootScopeProvider() {
         } finally {
           clearPhase();
           try {
+            this.$$dirty = true;
             $rootScope.$digest();
           } catch (e) {
             $exceptionHandler(e);
@@ -1063,6 +1076,7 @@ function $RootScopeProvider() {
 
         function $applyAsyncExpression() {
           scope.$eval(expr);
+          scope.$$dirty = true;
         }
       },