diff --git a/apps/homescreen/js/apps.js b/apps/homescreen/js/apps.js
index e9054faaead2..5c67eef358d9 100644
--- a/apps/homescreen/js/apps.js
+++ b/apps/homescreen/js/apps.js
@@ -929,7 +929,7 @@
     },
 
     handleEvent: function(e) {
-      var icon, id;
+      var icon, id, rect;
 
       switch (e.type) {
       // App launching
@@ -1054,11 +1054,25 @@
         if (e.detail.dropTarget === null &&
             e.detail.clientX >= this.iconsLeft &&
             e.detail.clientX < this.iconsRight) {
-          console.log(e.detail.target, this.container.firstChild);
+          e.preventDefault();
+
+          // If there's an open group, check if we're dropping the icon outside
+          // of the group.
+          if (this.openGroup) {
+            rect = this.openGroup.container.getBoundingClientRect();
+            if (e.detail.clientY < rect.top || e.detail.clientY > rect.bottom) {
+              console.log('Removing from group');
+              this.openGroup.transferToContainer(e.detail.target, this.icons);
+              if (this.openGroup.container.children.length <= 1) {
+                this.closeOpenGroup();
+              }
+              break;
+            }
+          }
+
           // If the drop target is null, and the client coordinates are
           // within the panel, we must be dropping over the start or end of
           // the container.
-          e.preventDefault();
           var bottom = e.detail.clientY < this.lastWindowHeight / 2;
           console.debug('Reordering dragged icon to ' +
                       (bottom ? 'bottom' : 'top'));
@@ -1148,7 +1162,7 @@
           if (this.hoverIcon && !this.draggingGroup && !this.openGroup) {
             // Evaluate whether we should create a group
             var before = this.hoverIcon.classList.contains('hover-before');
-            var rect = this.container.getChildOffsetRect(this.hoverIcon);
+            rect = this.container.getChildOffsetRect(this.hoverIcon);
             if ((before && e.detail.clientX > rect.right - (rect.width / 2)) ||
                 (!before && e.detail.clientX < rect.left + (rect.width / 2))) {
               this.hoverIcon.classList.add('hover-over');
diff --git a/apps/homescreen/js/group.js b/apps/homescreen/js/group.js
index 8d048aea9a4c..841bbba8ecc6 100644
--- a/apps/homescreen/js/group.js
+++ b/apps/homescreen/js/group.js
@@ -25,6 +25,7 @@
     shadow.appendChild(this._template);
 
     this.background = shadow.getElementById('group-background');
+    this.removedChildren = [];
     this.state = 0;
   };
 
@@ -39,11 +40,28 @@
   proto.transferToContainer = function(child, container) {
     var icon = child.firstElementChild;
     this.container.removeChild(child, () => {
-      container.insertBefore(child, this.nextSibling);
       icon.showName = true;
+
+      this.removedChildren.push(child);
+      if (this.state === COLLAPSED) {
+        this.finishRemovingChildren(container);
+      }
     });
   };
 
+  proto.finishRemovingChildren = function(container) {
+    for (var child of this.removedChildren) {
+      container.insertBefore(child, this.parentNode);
+    }
+    this.removedChildren = [];
+
+    if (this.container.children.length === 1) {
+      this.transferToContainer(this.container.firstChild, container);
+    } else if (this.container.children.length === 0) {
+      container.removeChild(this.parentNode);
+    }
+  };
+
   proto.expand = function(parent) {
     // Make sure we transition from whatever state we're in correctly.
     switch (this.state) {
@@ -222,6 +240,7 @@
       this.container.synchronise();
 
       this.state = COLLAPSED;
+      this.finishRemovingChildren(parent);
     };
     this.background.addEventListener('transitionend', afterCollapsing);
   };