diff --git a/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/Project.cs b/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/Project.cs
index f756463a05..4d1e4ca94e 100644
--- a/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/Project.cs
+++ b/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/Project.cs
@@ -307,5 +307,10 @@ namespace ICSharpCode.PackageManagement.EnvDTE
 		{
 			fileService.OpenFile(fileName);
 		}
+		
+		internal bool IsFileFileInsideProjectFolder(string filePath)
+		{
+			return FileUtility.IsBaseDirectory(MSBuildProject.Directory, filePath);
+		}
 	}
 }
diff --git a/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/ProjectItems.cs b/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/ProjectItems.cs
index 6a4347d7a0..1b39f884f5 100644
--- a/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/ProjectItems.cs
+++ b/src/AddIns/Misc/PackageManagement/Project/Src/EnvDTE/ProjectItems.cs
@@ -34,9 +34,16 @@ namespace ICSharpCode.PackageManagement.EnvDTE
 		public virtual void AddFromFileCopy(string filePath)
 		{
 			string include = GetIncludePathForFileCopy(filePath);
-			CopyFileIntoProject(filePath, include);
-			Project.AddFileProjectItemUsingPathRelativeToProject(include);
-			Project.Save();
+			if (IsFileInsideProjectFolder(filePath)) {
+				ThrowExceptionIfFileDoesNotExist(filePath);
+			} else {
+				CopyFileIntoProject(filePath, include);
+			}
+			
+			using (IProjectBrowserUpdater updater = Project.CreateProjectBrowserUpdater()) {
+				Project.AddFileProjectItemUsingPathRelativeToProject(include);
+				Project.Save();
+			}
 		}
 		
 		/// <summary>
@@ -53,6 +60,18 @@ namespace ICSharpCode.PackageManagement.EnvDTE
 			return item.GetIncludePath(fileNameWithoutAnyPath);
 		}
 		
+		bool IsFileInsideProjectFolder(string filePath)
+		{
+			return Project.IsFileFileInsideProjectFolder(filePath);
+		}
+		
+		void ThrowExceptionIfFileDoesNotExist(string filePath)
+		{
+			if (!fileService.FileExists(filePath)) {
+				throw new FileNotFoundException("Cannot find file", filePath);
+			}
+		}
+		
 		void ThrowExceptionIfFileExists(string filePath)
 		{
 			if (fileService.FileExists(filePath)) {
diff --git a/src/AddIns/Misc/PackageManagement/Project/Src/FileExistsException.cs b/src/AddIns/Misc/PackageManagement/Project/Src/FileExistsException.cs
index 47d4d68c02..ccd2b26dd3 100644
--- a/src/AddIns/Misc/PackageManagement/Project/Src/FileExistsException.cs
+++ b/src/AddIns/Misc/PackageManagement/Project/Src/FileExistsException.cs
@@ -6,6 +6,7 @@ using System.IO;
 
 namespace ICSharpCode.PackageManagement
 {
+	[Serializable]
 	public class FileExistsException : Exception
 	{
 		public FileExistsException(string fileName)
diff --git a/src/AddIns/Misc/PackageManagement/Test/Src/EnvDTE/ProjectItemsTests.cs b/src/AddIns/Misc/PackageManagement/Test/Src/EnvDTE/ProjectItemsTests.cs
index 3ab65690e4..44cd009457 100644
--- a/src/AddIns/Misc/PackageManagement/Test/Src/EnvDTE/ProjectItemsTests.cs
+++ b/src/AddIns/Misc/PackageManagement/Test/Src/EnvDTE/ProjectItemsTests.cs
@@ -4,7 +4,9 @@
 using System;
 using System.Collections;
 using System.Collections.Generic;
+using System.IO;
 using System.Linq;
+
 using ICSharpCode.PackageManagement;
 using ICSharpCode.PackageManagement.EnvDTE;
 using ICSharpCode.SharpDevelop.Project;
@@ -886,5 +888,47 @@ namespace PackageManagement.Tests.EnvDTE
 			Assert.AreEqual(msbuildProject, fileItem.Project);
 			Assert.AreEqual("MainForm.cs", fileItem.DependentUpon);
 		}
+		
+		[Test]
+		public void AddFromFileCopy_AddExistingFileNameInsideProjectFolder_FileIsAddedToProject()
+		{
+			CreateProjectItems();
+			msbuildProject.FileName = @"d:\projects\myproject\myproject.csproj";
+			string fileName = @"d:\projects\myproject\test.cs";
+			fakeFileService.ExistingFileNames.Add(fileName);
+			
+			projectItems.AddFromFileCopy(fileName);
+			
+			string addedFileName = @"d:\projects\myproject\test.cs";
+			FileProjectItem fileItem = msbuildProject.FindFile(addedFileName);
+			Assert.AreEqual("test.cs", fileItem.Include);
+		}
+		
+		[Test]
+		public void AddFromFileCopy_AddExistingFileNameInsideProjectFolder_ProjectUpdaterIsDisposed()
+		{
+			CreateProjectItems();
+			IProjectBrowserUpdater projectBrowserUpdater = CreateProjectBrowserUpdater();
+			msbuildProject.FileName = @"d:\projects\myproject\myproject.csproj";
+			string fileName = @"d:\projects\myproject\test.cs";
+			fakeFileService.ExistingFileNames.Add(fileName);
+			
+			projectItems.AddFromFileCopy(fileName);
+			
+			projectBrowserUpdater.AssertWasCalled(updater => updater.Dispose());
+		}
+		
+		[Test]
+		public void AddFromFileCopy_AddNonExistentFileNameInsideProjectFolder_MissingFileExceptionThrown()
+		{
+			CreateProjectItems();
+			msbuildProject.FileName = @"d:\projects\myproject\myproject.csproj";
+			string fileName = @"d:\projects\myproject\test.cs";
+			
+			FileNotFoundException ex = Assert.Throws<FileNotFoundException>(() => projectItems.AddFromFileCopy(fileName));
+			
+			Assert.AreEqual("Cannot find file", ex.Message);
+			Assert.AreEqual(fileName, ex.FileName);
+		}
 	}
 }