diff --git a/src/main/frontend/modules/outliner/pipeline.cljs b/src/main/frontend/modules/outliner/pipeline.cljs
index d4929feb4..4978af125 100644
--- a/src/main/frontend/modules/outliner/pipeline.cljs
+++ b/src/main/frontend/modules/outliner/pipeline.cljs
@@ -41,14 +41,36 @@
                                            [(:db/id (:block/page block))]
                                            (map :db/id (:block/refs block))
                                            parents-refs))
+                            ;; Usually has changed as new-refs has page id while old-refs doesn't
                             refs-changed? (not= old-refs new-refs)
                             children (db-model/get-block-children-ids repo (:block/uuid block))
-                            children-refs (map (fn [id]
-                                                 (let [entity (db/entity [:block/uuid id])]
-                                                   {:db/id (:db/id entity)
-                                                    :block/path-refs (concat
-                                                                      (map :db/id (:block/path-refs entity))
-                                                                      new-refs)})) children)]
+                            ;; Builds map of children ids to their parent id and :block/refs ids
+                            children-maps (into {}
+                                                (map (fn [id]
+                                                       (let [entity (db/entity [:block/uuid id])]
+                                                         [(:db/id entity)
+                                                          {:parent-id (get-in entity [:block/parent :db/id])
+                                                           :block-ref-ids (map :db/id (:block/refs entity))}]))
+                                                     children))
+                            children-refs (map (fn [[id {:keys [block-ref-ids] :as child-map}]]
+                                                 {:db/id id
+                                                  ;; Recalculate :block/path-refs as db contains stale data for this attribute
+                                                  :block/path-refs
+                                                  (set/union
+                                                   ;; Refs from top-level parent
+                                                   new-refs
+                                                   ;; Refs from current block
+                                                   block-ref-ids
+                                                   ;; Refs from parents in between top-level
+                                                   ;; parent and current block
+                                                   (loop [parent-refs #{}
+                                                          parent-id (:parent-id child-map)]
+                                                     (if-let [parent (children-maps parent-id)]
+                                                       (recur (into parent-refs (:block-ref-ids parent))
+                                                              (:parent-id parent))
+                                                       ;; exits when top-level parent is reached
+                                                       parent-refs)))})
+                                               children-maps)]
                         (swap! *computed-ids set/union (set (cons (:block/uuid block) children)))
                         (util/concat-without-nil
                          [(when (and (seq new-refs)
diff --git a/src/test/frontend/modules/outliner/pipeline_test.cljs b/src/test/frontend/modules/outliner/pipeline_test.cljs
new file mode 100644
index 000000000..698328f4a
--- /dev/null
+++ b/src/test/frontend/modules/outliner/pipeline_test.cljs
@@ -0,0 +1,54 @@
+(ns frontend.modules.outliner.pipeline-test
+  (:require [cljs.test :refer [deftest is use-fixtures testing]]
+            [datascript.core :as d]
+            [frontend.state :as state]
+            [frontend.db :as db]
+            [frontend.modules.outliner.pipeline :as pipeline]
+            [frontend.test.helper :as test-helper :refer [load-test-files]]))
+
+(use-fixtures :each {:before (fn []
+                               ;; Set current-repo explicitly since it's not the default
+                               (state/set-current-repo! test-helper/test-db)
+                               (test-helper/start-test-db!))
+                     :after (fn []
+                              (state/set-current-repo! nil)
+                              (test-helper/destroy-test-db!))})
+
+(defn- get-blocks [db]
+  (->> (d/q '[:find (pull ?b [* {:block/path-refs [:block/name :db/id]}])
+              :in $
+              :where [?b :block/content] [(missing? $ ?b :block/pre-block?)]]
+            db)
+       (map first)))
+
+(deftest compute-block-path-refs
+  (load-test-files [{:file/path "pages/page1.md"
+                     :file/content "prop:: #bar
+- parent #foo
+  - child #baz
+    - grandchild #bing"}])
+  (testing "when a block's :refs change, descendants of block have correct :block/path-refs"
+    (let [conn (db/get-db test-helper/test-db false)
+          blocks (get-blocks @conn)
+          ;; Update parent block to replace #foo with #bar
+          new-tag-id (:db/id (d/entity @conn [:block/name "bar"]))
+          modified-blocks (map #(if (= "parent #foo" (:block/content %))
+                                  (assoc %
+                                         :block/refs [{:db/id new-tag-id}]
+                                         :block/path-refs [{:db/id new-tag-id}])
+                                  %)
+                               blocks)
+          refs-tx (pipeline/compute-block-path-refs {:tx-meta {:outliner-op :save-block}} modified-blocks)
+          _ (d/transact! conn (concat (map (fn [m] [:db/retract (:db/id m) :block/path-refs]) refs-tx)
+                                      refs-tx))
+          updated-blocks (->> (get-blocks @conn)
+                              (map #(hash-map :block/content (:block/content %)
+                                              :path-ref-names (mapv :block/name (:block/path-refs %)))))]
+      (is (= [;; still have old parent content b/c we're only testing :block/path-refs updates
+              {:block/content "parent #foo"
+               :path-ref-names ["page1" "bar"]}
+              {:block/content "child #baz"
+               :path-ref-names ["page1" "bar" "baz"]}
+              {:block/content "grandchild #bing"
+               :path-ref-names ["page1" "bar" "baz" "bing"]}]
+             updated-blocks)))))
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