diff --git a/org.eclipse.jgit.test/tst/org/eclipse/jgit/merge/MergeAlgorithmTest.java b/org.eclipse.jgit.test/tst/org/eclipse/jgit/merge/MergeAlgorithmTest.java
index 47f329251..b51329e29 100644
--- a/org.eclipse.jgit.test/tst/org/eclipse/jgit/merge/MergeAlgorithmTest.java
+++ b/org.eclipse.jgit.test/tst/org/eclipse/jgit/merge/MergeAlgorithmTest.java
@@ -98,6 +98,7 @@ public class MergeAlgorithmTest extends TestCase {
 	String replace_BCDEGI_by_ZZZZZZ=A+Z+Z+Z+Z+F+Z+H+Z+J;
 	String replace_CEFGHJ_by_YYYYYY=A+B+Y+D+Y+Y+Y+Y+I+Y;
 	String replace_BDE_by_ZZY=A+Z+C+Z+Y+F+G+H+I+J;
+	String delete_C=A+B+D+E+F+G+H+I+J;
 
 	/**
 	 * Check for a conflict where the second text was changed similar to the
@@ -190,6 +191,16 @@ public class MergeAlgorithmTest extends TestCase {
 				merge(base, replace_C_by_Z, replace_C_by_Z));
 	}
 
+	/**
+	 * Check that a deleted vs. a modified line shows up as conflict (see Bug
+	 * 328551)
+	 *
+	 * @throws IOException
+	 */
+	public void testDeleteVsModify() throws IOException {
+		assertEquals(A+B+XXX_0+XXX_1+Z+XXX_2+D+E+F+G+H+I+J, merge(base, delete_C, replace_C_by_Z));
+	}
+
 	private String merge(String commonBase, String ours, String theirs) throws IOException {
 		MergeResult r=MergeAlgorithm.merge(RawTextComparator.DEFAULT, new RawText(Constants.encode(commonBase)), new RawText(Constants.encode(ours)), new RawText(Constants.encode(theirs)));
 		ByteArrayOutputStream bo=new ByteArrayOutputStream(50);
diff --git a/org.eclipse.jgit/src/org/eclipse/jgit/merge/MergeAlgorithm.java b/org.eclipse.jgit/src/org/eclipse/jgit/merge/MergeAlgorithm.java
index d945f1965..868248713 100644
--- a/org.eclipse.jgit/src/org/eclipse/jgit/merge/MergeAlgorithm.java
+++ b/org.eclipse.jgit/src/org/eclipse/jgit/merge/MergeAlgorithm.java
@@ -201,28 +201,39 @@ public final class MergeAlgorithm {
 
 				// A conflicting region is found. Strip off common lines in
 				// in the beginning and the end of the conflicting region
-				int conflictLen = Math.min(oursEndB - oursBeginB, theirsEndB
-						- theirsBeginB);
+
+				// Determine the minimum length of the conflicting areas in OURS
+				// and THEIRS. Also determine how much bigger the conflicting
+				// area in THEIRS is compared to OURS. All that is needed to
+				// limit the search for common areas at the beginning or end
+				// (the common areas cannot be bigger then the smaller
+				// conflicting area. The delta is needed to know whether the
+				// complete conflicting area is common in OURS and THEIRS.
+				int minBSize = oursEndB - oursBeginB;
+				int BSizeDelta = minBSize - (theirsEndB - theirsBeginB);
+				if (BSizeDelta > 0)
+					minBSize -= BSizeDelta;
+
 				int commonPrefix = 0;
-				while (commonPrefix < conflictLen
+				while (commonPrefix < minBSize
 						&& cmp.equals(ours, oursBeginB + commonPrefix, theirs,
 								theirsBeginB + commonPrefix))
 					commonPrefix++;
-				conflictLen -= commonPrefix;
+				minBSize -= commonPrefix;
 				int commonSuffix = 0;
-				while (commonSuffix < conflictLen
+				while (commonSuffix < minBSize
 						&& cmp.equals(ours, oursEndB - commonSuffix - 1, theirs,
 								theirsEndB - commonSuffix - 1))
 					commonSuffix++;
-				conflictLen -= commonSuffix;
+				minBSize -= commonSuffix;
 
 				// Add the common lines at start of conflict
 				if (commonPrefix > 0)
 					result.add(1, oursBeginB, oursBeginB + commonPrefix,
 							ConflictState.NO_CONFLICT);
 
-				// Add the conflict
-				if (conflictLen > 0) {
+				// Add the conflict (Only if there is a conflict left to report)
+				if (minBSize > 0 || BSizeDelta != 0) {
 					result.add(1, oursBeginB + commonPrefix, oursEndB
 							- commonSuffix,
 							ConflictState.FIRST_CONFLICTING_RANGE);