diff --git a/Source/cmVisualStudio10TargetGenerator.cxx b/Source/cmVisualStudio10TargetGenerator.cxx
index 88ad178e9..6caaad1bc 100644
--- a/Source/cmVisualStudio10TargetGenerator.cxx
+++ b/Source/cmVisualStudio10TargetGenerator.cxx
@@ -857,19 +857,10 @@ void cmVisualStudio10TargetGenerator::WriteAllSources()
         si = this->GeneratorTarget->ExternalObjects.begin();
       si != this->GeneratorTarget->ExternalObjects.end(); ++si)
     {
-    // If an object file is generated, then vs10
-    // will use it in the build, and we have to list
-    // it as None instead of Object
-    if((*si)->GetPropertyAsBool("GENERATED"))
-      {
-      this->WriteSource("None", *si);
-      }
-    // If it is not a generated object then we have
-    // to use the Object type
-    else
-      {
-      this->WriteSource("Object", *si);
-      }
+    // If an object file is generated in this target, then vs10 will use
+    // it in the build, and we have to list it as None instead of Object.
+    std::vector<cmSourceFile*> const* d = this->Target->GetSourceDepends(*si);
+    this->WriteSource((d && !d->empty())? "None":"Object", *si);
     }
 
   this->WriteSources("None", this->GeneratorTarget->ExtraSources);
diff --git a/Tests/ExternalOBJ/CMakeLists.txt b/Tests/ExternalOBJ/CMakeLists.txt
index f12de11d7..683e7997c 100644
--- a/Tests/ExternalOBJ/CMakeLists.txt
+++ b/Tests/ExternalOBJ/CMakeLists.txt
@@ -59,3 +59,5 @@ ADD_EXECUTABLE(ExternalOBJ executable.cxx ${CUSTOM_OBJECT})
 # not didn't work.  So, repeat the executable using the object
 # directly and not from the output of the copy.
 ADD_EXECUTABLE(ExternalOBJ2 executable.cxx ${EXTERNAL_OBJECT})
+
+ADD_SUBDIRECTORY(Sub)
diff --git a/Tests/ExternalOBJ/Sub/CMakeLists.txt b/Tests/ExternalOBJ/Sub/CMakeLists.txt
new file mode 100644
index 000000000..35cd30c7d
--- /dev/null
+++ b/Tests/ExternalOBJ/Sub/CMakeLists.txt
@@ -0,0 +1,3 @@
+set_property(SOURCE ${CUSTOM_OBJECT} PROPERTY GENERATED 1)
+add_executable(ExternalOBJSub ../executable.cxx ${CUSTOM_OBJECT})
+add_dependencies(ExternalOBJSub ExternalOBJ) # depend on generating target