diff --git a/public/java/src/org/broadinstitute/sting/gatk/iterators/LocusIteratorByState.java b/public/java/src/org/broadinstitute/sting/gatk/iterators/LocusIteratorByState.java
index b8dd03317..a47c61d0b 100755
--- a/public/java/src/org/broadinstitute/sting/gatk/iterators/LocusIteratorByState.java
+++ b/public/java/src/org/broadinstitute/sting/gatk/iterators/LocusIteratorByState.java
@@ -465,7 +465,7 @@ public class LocusIteratorByState extends LocusIterator {
                         final CigarElement nextElement = state.peekForwardOnGenome();     // next cigar element
                         final CigarOperator nextOp = nextElement.getOperator();
                         final int readOffset = state.getReadOffset();                 // the base offset on this read
-                        byte[] insertedBases = Arrays.copyOfRange(read.getReadBases(), readOffset + 1, readOffset + 1 + nextElement.getLength());
+
                         int nextElementLength = nextElement.getLength();
 
                         if (op == CigarOperator.N)                                    // N's are never added to any pileup
@@ -483,8 +483,12 @@ public class LocusIteratorByState extends LocusIterator {
                         }
                         else {
                             if (!filterBaseInRead(read, location.getStart())) {
+                                String insertedBaseString = null;
+                                if (nextOp == CigarOperator.I) {
+                                    insertedBaseString = new String(Arrays.copyOfRange(read.getReadBases(), readOffset + 1, readOffset + 1 + nextElement.getLength()));
+                                }
                                 pile.add(new PileupElement(read, readOffset, false, nextOp == CigarOperator.D, nextOp == CigarOperator.I, nextOp == CigarOperator.S || (state.getGenomeOffset() == 0 && read.getSoftStart() != read.getAlignmentStart()),
-                                        new String(insertedBases),nextElementLength));
+                                        insertedBaseString,nextElementLength));
                                 size++;
                                 if (read.getMappingQuality() == 0)
                                     nMQ0Reads++;
diff --git a/public/java/test/org/broadinstitute/sting/gatk/iterators/LocusIteratorByStateUnitTest.java b/public/java/test/org/broadinstitute/sting/gatk/iterators/LocusIteratorByStateUnitTest.java
index 04e11db54..7282d6c48 100644
--- a/public/java/test/org/broadinstitute/sting/gatk/iterators/LocusIteratorByStateUnitTest.java
+++ b/public/java/test/org/broadinstitute/sting/gatk/iterators/LocusIteratorByStateUnitTest.java
@@ -6,6 +6,7 @@ import net.sf.samtools.SAMRecord;
 import net.sf.samtools.util.CloseableIterator;
 import org.broadinstitute.sting.gatk.filters.ReadFilter;
 import org.broadinstitute.sting.utils.Utils;
+import org.broadinstitute.sting.utils.pileup.PileupElement;
 import org.broadinstitute.sting.utils.pileup.ReadBackedPileup;
 import org.broadinstitute.sting.utils.sam.GATKSAMRecord;
 import org.testng.Assert;
@@ -85,6 +86,55 @@ public class LocusIteratorByStateUnitTest extends BaseTest {
 
         Assert.assertTrue(foundExtendedEventPileup,"Extended event pileup not found");
     }
+    @Test
+    public void testIndelsInRegularPileup() {
+        final byte[] bases = new byte[] {'A','A','A','A','A','A','A','A','A','A'};
+        final byte[] indelBases = new byte[] {'A','A','A','A','C','T','A','A','A','A','A','A'};
+
+        // create a test version of the Reads object
+        ReadProperties readAttributes = createTestReadProperties();
+        JVMUtils.setFieldValue(JVMUtils.findField(ReadProperties.class,"generateExtendedEvents"),readAttributes,true);
+
+        SAMRecord before = ArtificialSAMUtils.createArtificialRead(header,"before",0,1,10);
+        before.setReadBases(bases);
+        before.setBaseQualities(new byte[] {20,20,20,20,20,20,20,20,20,20});
+        before.setCigarString("10M");
+
+        SAMRecord during = ArtificialSAMUtils.createArtificialRead(header,"during",0,2,10);
+        during.setReadBases(indelBases);
+        during.setBaseQualities(new byte[] {20,20,20,20,20,20,20,20,20,20,20,20});
+        during.setCigarString("4M2I6M");
+
+        SAMRecord after  = ArtificialSAMUtils.createArtificialRead(header,"after",0,3,10);
+        after.setReadBases(bases);
+        after.setBaseQualities(new byte[] {20,20,20,20,20,20,20,20,20,20});
+        after.setCigarString("10M");
+
+        List<SAMRecord> reads = Arrays.asList(before,during,after);
+
+        // create the iterator by state with the fake reads and fake records
+        li = makeLTBS(reads,readAttributes);
+
+        boolean foundIndel = false;
+        while (li.hasNext()) {
+            AlignmentContext context = li.next();
+            if(!context.hasBasePileup())
+                continue;
+
+            ReadBackedPileup pileup = context.getBasePileup().getBaseFilteredPileup(10);
+            for (PileupElement p : pileup) {
+                if (p.isBeforeInsertion()) {
+                    foundIndel = true;
+                    Assert.assertEquals(p.getEventLength(), 2, "Wrong event length");
+                    Assert.assertEquals(p.getEventBases(), "CT", "Inserted bases are incorrect");
+                    break;
+               }
+            }
+
+         }
+
+         Assert.assertTrue(foundIndel,"Indel in pileup not found");
+    }
 
     /**
      * Right now, the GATK's extended event pileup DOES NOT include reads which stop immediately before an insertion