diff --git a/view/live/live.js b/view/live/live.js
index 6567a1ab63a..9d6033ecf3d 100644
--- a/view/live/live.js
+++ b/view/live/live.js
@@ -229,7 +229,11 @@ steal('can/util', 'can/view/elements.js', 'can/view', 'can/view/node_lists', 'ca
 					if (!duringTeardown && data.teardownCheck(text.parentNode)) {
 						return;
 					}
-					var removedMappings = masterNodeList.splice(index+1, items.length),
+					if(index < 0) {
+						index = indexMap.length + index;
+					}
+
+					var removedMappings = masterNodeList.splice(index + 1, items.length),
 						itemsToRemove = [];
 					can.each(removedMappings, function (nodeList) {
 						
diff --git a/view/stache/stache_test.js b/view/stache/stache_test.js
index 74fb6b1c7f6..8fba4a50ea8 100644
--- a/view/stache/stache_test.js
+++ b/view/stache/stache_test.js
@@ -3629,4 +3629,17 @@ steal("can/view/stache", "can/view","can/test","can/view/mustache/spec/specs",fu
 
 		equal(frag.childNodes[0].outerHTML, expected, '<col> nodes added in proper position');
 	});
+
+	test('splicing negative indices works (#1038)', function() {
+		// http://jsfiddle.net/ZrWVQ/2/
+		var template = '{{#each list}}<p>{{.}}</p>{{/each}}';
+		var list = new can.List(['a', 'b', 'c', 'd']);
+		var frag = can.stache(template)({
+			list: list
+		});
+		var children = frag.childNodes.length;
+
+		list.splice(-1);
+		equal(frag.childNodes.length, children - 1, 'Child node removed');
+	});
 });