diff --git a/includes/install.inc b/includes/install.inc
index d68185e9145..2ce311ee59f 100644
--- a/includes/install.inc
+++ b/includes/install.inc
@@ -301,6 +301,24 @@ function drupal_verify_profile($profile, $locale) {
  *   The modules to install.
  */
 function drupal_install_modules($module_list = array()) {
+  $files = module_rebuild_cache();
+  $module_list = array_flip(array_values($module_list));
+  do {
+    $moved = FALSE;
+    foreach ($module_list as $module => $weight) {
+      $file = $files[$module];
+      if (isset($file->info['dependencies']) && is_array($file->info['dependencies'])) {
+        foreach ($file->info['dependencies'] as $dependency) {
+          if (isset($module_list[$dependency]) && $module_list[$module] < $module_list[$dependency] +1) {
+            $module_list[$module] = $module_list[$dependency] +1;
+            $moved = TRUE;
+          }
+        }
+      }
+    }
+  } while ($moved);
+  asort($module_list);
+  $module_list = array_keys($module_list);
   array_filter($module_list, '_drupal_install_module');
   module_enable($module_list);
 }
diff --git a/includes/module.inc b/includes/module.inc
index c249a417589..651680b3b23 100644
--- a/includes/module.inc
+++ b/includes/module.inc
@@ -147,30 +147,74 @@ function module_rebuild_cache() {
       db_query("INSERT INTO {system} (name, info, type, filename, status, throttle, bootstrap) VALUES ('%s', '%s', '%s', '%s', %d, %d, %d)", $file->name, serialize($files[$filename]->info), 'module', $file->filename, 0, 0, $bootstrap);
     }
   }
-  $files = _module_build_dependents($files);
+  $files = _module_build_dependencies($files);
   return $files;
 }
 
 /**
- * Find dependents; modules that are required by other modules.
- * Adds an array of dependents to the $file->info array.
+ * Find dependencies any level deep and fill in dependents information too.
  *
+ * If module A depends on B which in turn depends on C then this function will
+ * add C to the list of modules A depends on. This will be repeated until
+ * module A has a list of all modules it depends on. If it depends on itself,
+ * called a circular dependency, that's marked by adding a nonexistent module,
+ * called -circular- to this list of modules. Because this does not exist,
+ * it'll be impossible to switch module A on.
+ *
+ * Also we fill in a dependents array in $file->info. Using the names above,
+ * the dependents array of module B lists A.
+ *
+ * @param $files
+ *   The array of filesystem objects used to rebuild the cache.
  * @return
- *   The list of files array with dependents added where applicable.
+ *   The same array with dependencies and dependents added where applicable.
  */
-function _module_build_dependents($files) {
-  foreach ($files as $filename => $file) {
-    if (isset($file->info['dependencies']) && is_array($file->info['dependencies'])) {
-      foreach ($file->info['dependencies'] as $dependency) {
-        if (!empty($files[$dependency]) && is_array($files[$dependency]->info)) {
-          if (!isset($files[$dependency]->info['dependents'])) {
-            $files[$dependency]->info['dependents'] = array();
+function _module_build_dependencies($files) {
+  do {
+    $new_dependency = FALSE;
+    foreach ($files as $filename => $file) {
+      // We will modify this object (module A, see doxygen for module A, B, C).
+      $file = &$files[$filename];
+      if (isset($file->info['dependencies']) && is_array($file->info['dependencies'])) {
+        foreach ($file->info['dependencies'] as $dependency_name) {
+          // This is a nonexistent module.
+          if ($dependency_name == '-circular-') {
+            continue;
+          }
+          // $dependency_name is module B (again, see doxygen).
+          $files[$dependency_name]->info['dependents'][$filename] = $filename;
+          $dependency = $files[$dependency_name];
+          if (isset($dependency->info['dependencies']) && is_array($dependency->info['dependencies'])) {
+            // Let's find possible C modules.
+            foreach ($dependency->info['dependencies'] as $candidate) {
+              if (array_search($candidate, $file->info['dependencies']) === FALSE) {
+                // Is this a circular dependency?
+                if ($candidate == $filename) {
+                  // As a module name can not contain dashes, this makes
+                  // impossible to switch on the module.
+                  $candidate = '-circular-';
+                  // Do not display the message or add -circular- more than once.
+                  if (array_search($candidate, $file->info['dependencies']) !== FALSE) {
+                    continue;
+                  }
+                  drupal_set_message(t('%module is part of a circular dependency. This is not supported and you will not be able to switch it on.', array('%module' => $file->info['name'])), 'error');
+                }
+                else {
+                  // We added a new dependency to module A. The next loop will
+                  // be able to use this as "B module" thus finding even
+                  // deeper dependencies.
+                  $new_dependency = TRUE;
+                }
+                $file->info['dependencies'][] = $candidate;
+              }
+            }
           }
-          $files[$dependency]->info['dependents'][] = $filename;
         }
       }
+      // Don't forget to break the reference.
+      unset($file);
     }
-  }
+  } while ($new_dependency);
   return $files;
 }
 
diff --git a/modules/system/system.admin.inc b/modules/system/system.admin.inc
index 368056a2b9c..a81f36f3da0 100644
--- a/modules/system/system.admin.inc
+++ b/modules/system/system.admin.inc
@@ -535,6 +535,12 @@ function system_theme_settings_submit($form, &$form_state) {
  * Recursively check compatability
  */
 function _system_is_incompatible(&$incompatible, $files, $file) {
+  static $seen;
+  // We need to protect ourselves in case of a circular dependency.
+  if (isset($seen[$file->name])) {
+    return isset($incompatible[$file->name]);
+  }
+  $seen[$file->name] = TRUE;
   if (isset($incompatible[$file->name])) {
     return TRUE;
   }