diff --git a/docs/changes.txt b/docs/changes.txt
index b2891a46ba..9cd86bbe5f 100644
--- a/docs/changes.txt
+++ b/docs/changes.txt
@@ -644,6 +644,7 @@ wxMSW:
 - Fix handling of controls in the vertical toolbars (Artur Wieczorek).
 - Fix loading of top to bottom BMP files in wxBitmap (Artur Wieczorek).
 - Fix resource leak in wxStaticBitmap with RGBA icons (Artur Wieczorek).
+- Fix handling of deleting directories in wxFileSystemWatcher (Eric Raijmakers).
 - Disable the use of new style wxDirDialog under Vista to work around a bug in
   its implementation under this system (jtrauntvein).
 
diff --git a/include/wx/msw/private/fswatcher.h b/include/wx/msw/private/fswatcher.h
index cfd1d5b7b4..d0329194a4 100644
--- a/include/wx/msw/private/fswatcher.h
+++ b/include/wx/msw/private/fswatcher.h
@@ -225,7 +225,10 @@ public:
         // Special status indicating that we should exit retrieved.
         Status_Exit,
 
-        // Some error occurred.
+        // An error occurred because the watched directory was deleted.
+        Status_Deleted,
+
+        // Some other error occurred.
         Status_Error
     };
 
@@ -248,6 +251,14 @@ public:
             return *count || *watch || *overlapped ? Status_OK : Status_Exit;
         }
 
+        // An error is returned if the underlying directory has been deleted,
+        // but this is not really an unexpected failure, so handle it
+        // specially.
+        if ( wxSysErrorCode() == ERROR_ACCESS_DENIED &&
+                *watch && !wxFileName::DirExists((*watch)->GetPath()) )
+            return Status_Deleted;
+
+        // Some other error, at least log it.
         wxLogSysError(_("Unable to dequeue completion packet"));
 
         return Status_Error;
diff --git a/src/msw/fswatcher.cpp b/src/msw/fswatcher.cpp
index 98b1c1609f..cbfc0a8860 100644
--- a/src/msw/fswatcher.cpp
+++ b/src/msw/fswatcher.cpp
@@ -232,6 +232,21 @@ bool wxIOCPThread::ReadEvents()
         case wxIOCPService::Status_Error:
             return true; // error was logged already, we don't want to exit
 
+        case wxIOCPService::Status_Deleted:
+            {
+                wxFileSystemWatcherEvent
+                    removeEvent(wxFSW_EVENT_DELETE,
+                                watch->GetPath(),
+                                wxFileName());
+                SendEvent(removeEvent);
+            }
+
+            // It isn't useful to continue watching this directory as it
+            // doesn't exist any more -- and even recreating a directory with
+            // the same name still wouldn't resume generating events for the
+            // existing wxIOCPService, so it's useless to continue.
+            return false;
+
         case wxIOCPService::Status_Exit:
             return false; // stop reading events
     }