diff --git a/qa/rpc-tests/prioritise_transaction.py b/qa/rpc-tests/prioritise_transaction.py
index f376ceee5..d9492f27a 100755
--- a/qa/rpc-tests/prioritise_transaction.py
+++ b/qa/rpc-tests/prioritise_transaction.py
@@ -143,5 +143,45 @@ class PrioritiseTransactionTest(BitcoinTestFramework):
             if (x != high_fee_tx):
                 assert(x not in mempool)
 
+        # Create a free, low priority transaction.  Should be rejected.
+        utxo_list = self.nodes[0].listunspent()
+        assert(len(utxo_list) > 0)
+        utxo = utxo_list[0]
+
+        inputs = []
+        outputs = {}
+        inputs.append({"txid" : utxo["txid"], "vout" : utxo["vout"]})
+        outputs[self.nodes[0].getnewaddress()] = utxo["amount"] - self.relayfee
+        raw_tx = self.nodes[0].createrawtransaction(inputs, outputs)
+        tx_hex = self.nodes[0].signrawtransaction(raw_tx)["hex"]
+        txid = self.nodes[0].sendrawtransaction(tx_hex)
+
+        # A tx that spends an in-mempool tx has 0 priority, so we can use it to
+        # test the effect of using prioritise transaction for mempool acceptance
+        inputs = []
+        inputs.append({"txid": txid, "vout": 0})
+        outputs = {}
+        outputs[self.nodes[0].getnewaddress()] = utxo["amount"] - self.relayfee
+        raw_tx2 = self.nodes[0].createrawtransaction(inputs, outputs)
+        tx2_hex = self.nodes[0].signrawtransaction(raw_tx2)["hex"]
+        tx2_id = self.nodes[0].decoderawtransaction(tx2_hex)["txid"]
+
+        try:
+            self.nodes[0].sendrawtransaction(tx2_hex)
+        except JSONRPCException as exp:
+            assert_equal(exp.error['code'], -26) # insufficient fee
+            assert(tx2_id not in self.nodes[0].getrawmempool())
+        else:
+            assert(False)
+
+        # This is a less than 1000-byte transaction, so just set the fee
+        # to be the minimum for a 1000 byte transaction and check that it is
+        # accepted.
+        self.nodes[0].prioritisetransaction(tx2_id, 0, int(self.relayfee*COIN))
+
+        print "Assert that prioritised free transaction is accepted to mempool"
+        assert_equal(self.nodes[0].sendrawtransaction(tx2_hex), tx2_id)
+        assert(tx2_id in self.nodes[0].getrawmempool())
+
 if __name__ == '__main__':
     PrioritiseTransactionTest().main()
diff --git a/src/main.cpp b/src/main.cpp
index 23df8ca68..12642f319 100644
--- a/src/main.cpp
+++ b/src/main.cpp
@@ -968,6 +968,11 @@ bool AcceptToMemoryPoolWorker(CTxMemPool& pool, CValidationState &state, const C
 
         CAmount nValueOut = tx.GetValueOut();
         CAmount nFees = nValueIn-nValueOut;
+        // nModifiedFees includes any fee deltas from PrioritiseTransaction
+        CAmount nModifiedFees = nFees;
+        double nPriorityDummy = 0;
+        pool.ApplyDeltas(hash, nPriorityDummy, nModifiedFees);
+
         CAmount inChainInputValue;
         double dPriority = view.GetPriority(tx, chainActive.Height(), inChainInputValue);
 
@@ -987,14 +992,17 @@ bool AcceptToMemoryPoolWorker(CTxMemPool& pool, CValidationState &state, const C
 
         // Don't accept it if it can't get into a block
         CAmount txMinFee = GetMinRelayFee(tx, pool, nSize, true);
+
+        // txMinFee takes into account priority/fee deltas, so compare using
+        // nFees rather than nModifiedFees
         if (fLimitFree && nFees < txMinFee)
             return state.DoS(0, false, REJECT_INSUFFICIENTFEE, "insufficient fee", false,
                 strprintf("%d < %d", nFees, txMinFee));
 
         CAmount mempoolRejectFee = pool.GetMinFee(GetArg("-maxmempool", DEFAULT_MAX_MEMPOOL_SIZE) * 1000000).GetFee(nSize);
-        if (mempoolRejectFee > 0 && nFees < mempoolRejectFee) {
+        if (mempoolRejectFee > 0 && nModifiedFees < mempoolRejectFee) {
             return state.DoS(0, false, REJECT_INSUFFICIENTFEE, "mempool min fee not met", false, strprintf("%d < %d", nFees, mempoolRejectFee));
-        } else if (GetBoolArg("-relaypriority", DEFAULT_RELAYPRIORITY) && nFees < ::minRelayTxFee.GetFee(nSize) && !AllowFree(entry.GetPriority(chainActive.Height() + 1))) {
+        } else if (GetBoolArg("-relaypriority", DEFAULT_RELAYPRIORITY) && nModifiedFees < ::minRelayTxFee.GetFee(nSize) && !AllowFree(entry.GetPriority(chainActive.Height() + 1))) {
             // Require that free transactions have sufficient priority to be mined in the next block.
             return state.DoS(0, false, REJECT_INSUFFICIENTFEE, "insufficient priority");
         }
@@ -1002,7 +1010,7 @@ bool AcceptToMemoryPoolWorker(CTxMemPool& pool, CValidationState &state, const C
         // Continuously rate-limit free (really, very-low-fee) transactions
         // This mitigates 'penny-flooding' -- sending thousands of free transactions just to
         // be annoying or make others' transactions take longer to confirm.
-        if (fLimitFree && nFees < ::minRelayTxFee.GetFee(nSize))
+        if (fLimitFree && nModifiedFees < ::minRelayTxFee.GetFee(nSize))
         {
             static CCriticalSection csFreeLimiter;
             static double dFreeCount;
@@ -1061,10 +1069,6 @@ bool AcceptToMemoryPoolWorker(CTxMemPool& pool, CValidationState &state, const C
         uint64_t nConflictingCount = 0;
         CTxMemPool::setEntries allConflicting;
 
-        CAmount nModifiedFees = nFees;
-        double nPriorityDummy = 0;
-        pool.ApplyDeltas(hash, nPriorityDummy, nModifiedFees);
-
         // If we don't hold the lock allConflicting might be incomplete; the
         // subsequent RemoveStaged() and addUnchecked() calls don't guarantee
         // mempool consistency for us.