diff --git a/src/node.js b/src/node.js
index 1e81684fc9..f96eeb719e 100644
--- a/src/node.js
+++ b/src/node.js
@@ -1,16 +1,38 @@
-// module search paths
-node.includes = ["."];
+// Timers
+
+function setTimeout (callback, delay) {
+  var timer = new node.Timer(callback, delay, 0); 
+  timer.start();
+  return timer;
+}
+
+function setInterval (callback, delay) {
+  var timer = new node.Timer(callback, delay, delay); 
+  timer.start();
+  return timer;
+}
+
+function clearTimeout (timer) {
+  timer.stop();
+  delete timer;
+}
+
+clearInterval = clearTimeout;
 
 // This is useful for dealing with raw encodings.
 Array.prototype.encodeUtf8 = function () {
   return String.fromCharCode.apply(String, this);
-}
+};
 
 node.path = new function () {
   this.join = function () {
     var joined = "";
     for (var i = 0; i < arguments.length; i++) {
       var part = arguments[i].toString();
+
+      if (part === ".") continue;
+      while (/^\.\//.exec(part)) part = part.replace(/^\.\//, "");
+
       if (i === 0) {
         part = part.replace(/\/*$/, "/");
       } else if (i === arguments.length - 1) {
@@ -32,149 +54,93 @@ node.path = new function () {
   };
 };
 
-// Timers
-
-function setTimeout (callback, delay) {
-  var timer = new node.Timer(callback, delay, 0); 
-  timer.start();
-  return timer;
-};
-
-function setInterval (callback, delay) {
-  var timer = new node.Timer(callback, delay, delay); 
-  timer.start();
-  return timer;
-};
-
-function clearTimeout (timer) {
-  timer.stop();
-  delete timer;
-};
-clearInterval = clearTimeout;
+// Module
 
-// Modules
+node.Module = function (o) {
+  this.parent = o.parent;
+  this.target = o.target || {};
 
-(function () {
-  function findScript(base_directory, name, callback) {
-    // in the future this function will be more complicated
-    if (name.charAt(0) == "/")
-      throw "absolute module paths are not yet supported.";
+  if (!o.path)   throw "path argument required";
+  if (o.path.charAt(0) == "/")
+    throw "Absolute module paths are not yet supported in Node";
 
-    var filename = node.path.join(base_directory, name) + ".js";
+  var dir = o.base_directory || ".";
+  this.filename = node.path.join(dir, o.path);
 
-    node.fs.exists(filename, function (status) {
-      callback(status ? filename : null);
-    });
-  }
+  this.loaded = false;
+  this.exited = false;
+  this.children = [];
+};
 
-  // Constructor for submodule.
-  // "name" is like a path but without .js. e.g. "database/mysql"
-  // "target" is an object into which the submodule will be loaded.
-  function Sub (name, target) {
-    this.name = name;
-    this.target = target;
-
-    this.load = function (base_directory, callback) {
-      //node.debug("sub.load from <" + base_directory + ">  " + this.toString());
-      findScript(base_directory, name, function (filename) {
-        if (filename === null) {
-          stderr.puts("Cannot find a script matching: " + name);
-          node.exit(1);
-        }
-        loadScript(filename, target, callback);
-      });
-    };
-
-    this.toString = function () {
-      return "[sub name=" + name + " target=" + target.toString() + "]";
-    }
-  }
+node.Module.prototype.load = function (callback) {
+  var self = this;
+  if (self.loaded) 
+    throw "Module '" + self.filename + "' is already loaded.";
 
-  function Scaffold (source, filename, module) {
-    // wrap the source in a strange function 
-    var source = "function (__filename) {" 
-               + "  var onLoad;"
-               + "  var exports = this;"
-               + "  var require = this.__require;"
-               + "  var include = this.__include;"
-               +    source 
-               + "  this.__onLoad = onLoad;"
-               + "};"
-               ;
-    // returns the function       
-    var compiled = node.compile(source, filename);
-
-    if (module.__onLoad) {
-      //node.debug("<"+ filename+"> has onload! this is bad");
+  node.fs.cat(self.filename, "utf8", function (status, content) {
+    if (status != 0) {
+      stderr.puts("Error reading " + self.filename);
+      node.exit(1);
     }
 
-    module.__subs = [];
-    module.__require = function (name) {
-      var target = {};
-      module.__subs.push(new Sub(name, target));
-      return target;
-    }
-    module.__include = function (name) {
-      module.__subs.push(new Sub(name, module));
-    }
-    // execute the script of interest
-    compiled.apply(module, [filename]);
-
-    // The module still needs to have its submodules loaded.
-    this.filename = filename;
-    this.module  = module;
-    this.subs    = module.__subs;
-    this.onLoad = module.__onLoad;
-
-    // remove these references so they don't get exported.
-    delete module.__subs;
-    delete module.__onLoad;
-    delete module.__require;
-    delete module.__include;
-  }
-
-  function loadScript (filename, target, callback) {
-    node.fs.cat(filename, "utf8", function (status, content) {
-      if (status != 0) {
-        stderr.puts("Error reading " + filename);
-        node.exit(1);
-      }
+    self.target.__require = function (path) { return self.newChild(path, {}); };
+    self.target.__include = function (path) { self.newChild(path, self.target); };
+
+    // create wrapper function
+    var wrapper = "function (__filename) {\n" 
+                + "  var onLoad;\n"
+                + "  var onExit;\n"
+                + "  var exports = this;\n"
+                + "  var require = this.__require;\n"
+                + "  var include = this.__include;\n"
+                +    content 
+                + "\n"
+                + "  this.__onLoad = onLoad;\n"
+                + "  this.__onExit = onExit;\n"
+                + "};\n"
+                ;
+    var compiled_wrapper = node.compile(wrapper, self.filename);
       
-      var scaffold = new Scaffold(content, filename, target);
-
-      //node.debug("after scaffold <" + filename + ">");
-
-      function finish() {
-        //node.debug("finish 1 load <" + filename + ">");
-        if (scaffold.onLoad instanceof Function) {
-          //node.debug("calling onLoad for <" + filename + ">"); 
-          scaffold.onLoad(); 
-        }
-        //node.debug("finish 2 load <" + filename + ">");
+    // execute the script of interest
+    compiled_wrapper.apply(self.target, [self.filename]);
+    self.onLoad = self.target.__onLoad;
+    self.onExit = self.target.__onExit;
+
+    self.loadChildren(function () {
+      if (self.onLoad) self.onLoad();
+      self.loaded = true;
+      if (callback) callback();
+    });
+  });
+};
 
-        if (callback instanceof Function)
-          callback();
-      }
+node.Module.prototype.newChild = function (path, target) {
+  var child = new node.Module({ 
+    target: target,
+    path: path,
+    base_directory: node.path.dirname(this.filename),
+    parent: this
+  });
+  this.children.push(child);
+  return target;
+};
 
-      // Each time require() or include() was called inside the script 
-      // a key/value was added to scaffold.__subs.
-      // Now we loop though each one and recursively load each.
-      if (scaffold.subs.length == 0) {
-        finish(); 
-      } else {
-        var ncomplete = 0;
-        for (var i = 0; i < scaffold.subs.length; i++) {
-          var sub = scaffold.subs[i];
-          sub.load(node.path.dirname(filename), function () {
-            ncomplete += 1;
-            //node.debug("<" + filename + "> ncomplete = " + ncomplete.toString() + " scaffold.subs.length = " + scaffold.subs.length.toString());
-            if (ncomplete === scaffold.subs.length)
-              finish();
-          });
-        }
-      }
+node.Module.prototype.loadChildren = function (callback) {
+  var children = this.children;
+  if (children.length == 0 && callback) callback();
+  var nloaded = 0;
+  for (var i = 0; i < children.length; i++) {
+    var child = children[i];
+    child.load(function () {
+      nloaded += 1;
+      if (nloaded == children.length && callback) callback(); 
     });
   }
+};
+
+node.Module.prototype.exit = function (callback) {
+  throw "not implemented";
+};
 
-  loadScript(ARGV[1], this);
-})();
+// Load the root module. I.E. the command line argument.
+(new node.Module({ path: ARGV[1], target: this })).load();
diff --git a/test/fixtures/a.js b/test/fixtures/a.js
index 111417ac1c..d1405e2d16 100644
--- a/test/fixtures/a.js
+++ b/test/fixtures/a.js
@@ -1,5 +1,10 @@
-var c = require("b/c");
+var c = require("b/c.js");
 exports.A = function () {
   return "A";
-}
-exports.C = function () { return c.C(); }
+};
+exports.C = function () {
+  return c.C();
+};
+exports.D = function () {
+  return c.D();
+};
diff --git a/test/fixtures/b/c.js b/test/fixtures/b/c.js
index 3524a64601..72b539e729 100644
--- a/test/fixtures/b/c.js
+++ b/test/fixtures/b/c.js
@@ -1,3 +1,9 @@
+var d = require("d.js");
+
 exports.C = function () {
   return "C";
-}
+};
+
+exports.D = function () {
+  return d.D();
+};
diff --git a/test/fixtures/b/d.js b/test/fixtures/b/d.js
new file mode 100644
index 0000000000..e7ae0e8d1a
--- /dev/null
+++ b/test/fixtures/b/d.js
@@ -0,0 +1,4 @@
+exports.D = function () {
+  return "D";
+};
+
diff --git a/test/test-cat-noexist.js b/test/test-cat-noexist.js
index 961f6ecf5a..a460feff81 100644
--- a/test/test-cat-noexist.js
+++ b/test/test-cat-noexist.js
@@ -1,4 +1,4 @@
-include("mjsunit");
+include("mjsunit.js");
 
 function onLoad () {
   var dirname = node.path.dirname(__filename);
diff --git a/test/test-file-open.js b/test/test-file-open.js
index 98da2f7dff..ad33a97f37 100644
--- a/test/test-file-open.js
+++ b/test/test-file-open.js
@@ -1,4 +1,4 @@
-include("mjsunit");
+include("mjsunit.js");
 var assert_count = 0;
 
 function onLoad () {
diff --git a/test/test-http-server.js b/test/test-http-server.js
index a813d0afd2..9ea99228d5 100644
--- a/test/test-http-server.js
+++ b/test/test-http-server.js
@@ -1,4 +1,4 @@
-include("mjsunit");
+include("mjsunit.js");
 
 var port = 8222;
 
diff --git a/test/test-module-loading.js b/test/test-module-loading.js
new file mode 100644
index 0000000000..aa4c28823a
--- /dev/null
+++ b/test/test-module-loading.js
@@ -0,0 +1,23 @@
+include("mjsunit.js");
+var a = require("fixtures/a.js");
+var d = require("fixtures/b/d.js");
+var d2 = require("fixtures/b/d.js");
+
+function onLoad () {
+  assertFalse(false, "testing the test program.");
+
+  assertInstanceof(a.A, Function);
+  assertEquals("A", a.A());
+
+  assertInstanceof(a.C, Function);
+  assertEquals("C", a.C());
+
+  assertInstanceof(a.D, Function);
+  assertEquals("D", a.D());
+
+  assertInstanceof(d.D, Function);
+  assertEquals("D", d.D());
+
+  assertInstanceof(d2.D, Function);
+  assertEquals("D", d2.D());
+}
diff --git a/test/test-pingpong.js b/test/test-pingpong.js
index 5eff9bb3cd..b373d820a5 100644
--- a/test/test-pingpong.js
+++ b/test/test-pingpong.js
@@ -1,4 +1,4 @@
-include("mjsunit");
+include("mjsunit.js");
 
 var port = 12123;
 var N = 1000;
diff --git a/test/test-reconnecting-socket.js b/test/test-reconnecting-socket.js
index 593fb5ef42..f3464be164 100644
--- a/test/test-reconnecting-socket.js
+++ b/test/test-reconnecting-socket.js
@@ -1,4 +1,4 @@
-include("mjsunit");
+include("mjsunit.js");
 var port = 8921;
 
 function onLoad () {
diff --git a/test/test-setTimeout.js b/test/test-setTimeout.js
index 8973bc9eae..718373c607 100644
--- a/test/test-setTimeout.js
+++ b/test/test-setTimeout.js
@@ -1,4 +1,4 @@
-include("mjsunit");
+include("mjsunit.js");
 
 function onLoad () {
   assertInstanceof(setTimeout, Function);
diff --git a/test/test-test.js b/test/test-test.js
deleted file mode 100644
index 41906740ce..0000000000
--- a/test/test-test.js
+++ /dev/null
@@ -1,12 +0,0 @@
-include("mjsunit");
-var a = require("fixtures/a");
-
-function onLoad () {
-  assertFalse(false, "testing the test program.");
-
-  assertInstanceof(a.A, Function);
-  assertEquals("A", a.A());
-
-  assertInstanceof(a.C, Function);
-  assertEquals("C", a.C());
-}
diff --git a/website/api.html b/website/api.html
index 00a9a7904f..d67e67a4e4 100644
--- a/website/api.html
+++ b/website/api.html
@@ -880,7 +880,7 @@ req.finish(function (res) {
   <p>The contents of <code>foo.js</code>:</p>
 
   <pre>
-include("mjsunit");
+include("mjsunit.js");
 function onLoad () {
   assertEquals(1, 2);
 }</pre>
@@ -900,12 +900,11 @@ exports.assertEquals = function (expected, found, name_opt) {
 };</pre>
 
   <p>
-    The module <code>mjsunit</code> has exported a function
+    The module <code>mjsunit.js</code> has exported a function
     <code>assertEquals()</code>.  <code>mjsunit.js</code> must be
     in the same directory as <code>foo.js</code> for
     <code>include()</code> to find it. The module path is relative
-    to the file calling <code>include()</code>. The module path does
-    not include filename extensions like <code>.js</code>.
+    to the file calling <code>include()</code>. 
   </p>
 
   <p>
@@ -935,7 +934,7 @@ exports.assertEquals = function (expected, found, name_opt) {
     after the <code>onLoad()</code> callback is made. For example:
   </p>
   <pre>
-var mjsunit = require("mjsunit");
+var mjsunit = require("mjsunit.js");
 function onLoad () {
   mjsunit.assertEquals(1, 2);
 }</pre>