diff --git a/pandatool/src/converter/somethingToEggConverter.I b/pandatool/src/converter/somethingToEggConverter.I
index 56f56d9fdf..2c5d63e71a 100644
--- a/pandatool/src/converter/somethingToEggConverter.I
+++ b/pandatool/src/converter/somethingToEggConverter.I
@@ -52,6 +52,30 @@ set_model_path_convert(PathConvert mpc,
   _mpc_directory = mpc_directory;
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: SomethingToEggConverter::set_merge_externals
+//       Access: Public
+//  Description: Sets the merge_externals flag.  When this is true,
+//               external references within the source file are read
+//               in and merged directly; otherwise, only a reference
+//               to a similarly-named egg file is inserted.
+////////////////////////////////////////////////////////////////////
+INLINE void SomethingToEggConverter::
+set_merge_externals(bool merge_externals) {
+  _merge_externals = merge_externals;
+}
+
+////////////////////////////////////////////////////////////////////
+//     Function: SomethingToEggConverter::get_merge_externals
+//       Access: Public
+//  Description: Returns the current state of the merge_externals
+//               flag.  See set_merge_externals().
+////////////////////////////////////////////////////////////////////
+INLINE bool SomethingToEggConverter::
+get_merge_externals() const {
+  return _merge_externals;
+}
+
 ////////////////////////////////////////////////////////////////////
 //     Function: SomethingToEggConverter::clear_egg_data
 //       Access: Public
@@ -73,6 +97,28 @@ get_egg_data() {
   return *_egg_data;
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: SomethingToEggConverter::handle_external_reference
+//       Access: Public
+//  Description: Handles an external reference in the source file.  If
+//               the merge_externals flag is true (see
+//               set_merge_externals()), this causes the named file to
+//               be read in and converted, and the converted egg
+//               geometry is parented to egg_parent.  Otherwise, only
+//               a reference to a similarly named egg file is parented
+//               to egg_parent.
+//
+//               The parameters orig_filename and searchpath are as
+//               those passed to convert_model_path().
+//
+//               Returns true on success, false on failure.
+////////////////////////////////////////////////////////////////////
+bool SomethingToEggConverter::
+handle_external_reference(EggGroupNode *egg_parent,
+			  const Filename &orig_filename) {
+  return handle_external_reference(egg_parent, orig_filename, get_model_path());
+}
+
 
 ////////////////////////////////////////////////////////////////////
 //     Function: SomethingToEggConverter::convert_texture_path
diff --git a/pandatool/src/converter/somethingToEggConverter.cxx b/pandatool/src/converter/somethingToEggConverter.cxx
index 2faeccedda..7e2a9859fc 100644
--- a/pandatool/src/converter/somethingToEggConverter.cxx
+++ b/pandatool/src/converter/somethingToEggConverter.cxx
@@ -6,6 +6,7 @@
 #include "somethingToEggConverter.h"
 
 #include <eggData.h>
+#include <eggExternalReference.h>
 
 ////////////////////////////////////////////////////////////////////
 //     Function: SomethingToEggConverter::Constructor
@@ -14,10 +15,29 @@
 ////////////////////////////////////////////////////////////////////
 SomethingToEggConverter::
 SomethingToEggConverter() {
-  _egg_data = (EggData *)NULL;
-  _owns_egg_data = false;
   _tpc = PC_absolute;
   _mpc = PC_absolute;
+  _merge_externals = false;
+  _egg_data = (EggData *)NULL;
+  _owns_egg_data = false;
+  _error = false;
+}
+
+////////////////////////////////////////////////////////////////////
+//     Function: SomethingToEggConverter::Copy Constructor
+//       Access: Public
+//  Description: 
+////////////////////////////////////////////////////////////////////
+SomethingToEggConverter::
+SomethingToEggConverter(const SomethingToEggConverter &copy) :
+  _tpc(copy._tpc),
+  _tpc_directory(copy._tpc_directory),
+  _mpc(copy._mpc),
+  _mpc_directory(copy._mpc_directory),
+  _merge_externals(copy._merge_externals)
+{
+  _egg_data = (EggData *)NULL;
+  _owns_egg_data = false;
   _error = false;
 }
 
@@ -50,6 +70,69 @@ set_egg_data(EggData *egg_data, bool owns_egg_data) {
   _owns_egg_data = owns_egg_data;
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: SomethingToEggConverter::handle_external_reference
+//       Access: Public
+//  Description: Handles an external reference in the source file.  If
+//               the merge_externals flag is true (see
+//               set_merge_externals()), this causes the named file to
+//               be read in and converted, and the converted egg
+//               geometry is parented to egg_parent.  Otherwise, only
+//               a reference to a similarly named egg file is parented
+//               to egg_parent.
+//
+//               The parameters orig_filename and searchpath are as
+//               those passed to convert_model_path().
+//
+//               Returns true on success, false on failure.
+////////////////////////////////////////////////////////////////////
+bool SomethingToEggConverter::
+handle_external_reference(EggGroupNode *egg_parent,
+			  const Filename &orig_filename,
+			  const DSearchPath &searchpath) {
+  if (_merge_externals) {
+    SomethingToEggConverter *ext = make_copy();
+    EggData egg_data;
+    egg_data.set_coordinate_system(get_egg_data().get_coordinate_system());
+    ext->set_egg_data(&egg_data, false);
+
+    // If we're reading references directly, don't mamby around with
+    // the path conversion stuff, just look for the file and read it.
+    Filename as_found = orig_filename;
+    if (!as_found.resolve_filename(searchpath)) {
+      // If the filename can't be found, try just the truncated
+      // filename.
+      Filename truncated = orig_filename.get_basename();
+      if (truncated.resolve_filename(searchpath)) {
+	as_found = truncated;
+      }
+    }
+
+    if (!ext->convert_file(as_found)) {
+      delete ext;
+      nout << "Unable to read external reference: " << orig_filename << "\n";
+      _error = true;
+      return false;
+    }
+
+    egg_parent->steal_children(egg_data);
+    delete ext;
+    return true;
+
+  } else {
+    // If we're installing external references instead of reading
+    // them, we should massage the filename as specified.
+    Filename filename = convert_model_path(orig_filename, searchpath);
+
+    filename.set_extension("egg");
+
+    EggExternalReference *egg_ref = new EggExternalReference("", filename);
+    egg_parent->add_child(egg_ref);
+  }
+
+  return true;
+}
+
 ////////////////////////////////////////////////////////////////////
 //     Function: SomethingToEggConverter::convert_path
 //       Access: Protected, Static
diff --git a/pandatool/src/converter/somethingToEggConverter.h b/pandatool/src/converter/somethingToEggConverter.h
index de9715a7b6..c8467c3513 100644
--- a/pandatool/src/converter/somethingToEggConverter.h
+++ b/pandatool/src/converter/somethingToEggConverter.h
@@ -12,6 +12,7 @@
 #include <config_util.h>  // for get_texture_path() and get_model_path()
 
 class EggData;
+class EggGroupNode;
 
 ////////////////////////////////////////////////////////////////////
 // 	 Class : SomethingToEggConverter
@@ -26,8 +27,11 @@ class EggData;
 class SomethingToEggConverter {
 public:
   SomethingToEggConverter();
+  SomethingToEggConverter(const SomethingToEggConverter &copy);
   virtual ~SomethingToEggConverter();
 
+  virtual SomethingToEggConverter *make_copy()=0;
+
   enum PathConvert {
     PC_relative,
     PC_absolute,
@@ -40,6 +44,9 @@ public:
   INLINE void set_model_path_convert(PathConvert mpc,
 				     const Filename &mpc_directory = Filename());
 
+  INLINE void set_merge_externals(bool merge_externals);
+  INLINE bool get_merge_externals() const;
+
   void set_egg_data(EggData *egg_data, bool owns_egg_data);
   INLINE void clear_egg_data();
   INLINE EggData &get_egg_data();
@@ -49,6 +56,12 @@ public:
 
   virtual bool convert_file(const Filename &filename)=0;
 
+  bool handle_external_reference(EggGroupNode *egg_parent,
+				 const Filename &orig_filename,
+				 const DSearchPath &searchpath);
+  INLINE bool handle_external_reference(EggGroupNode *egg_parent,
+					const Filename &orig_filename);
+
 
   INLINE Filename convert_texture_path(const Filename &orig_filename);
   INLINE Filename convert_texture_path(const Filename &orig_filename,
@@ -70,6 +83,8 @@ protected:
   PathConvert _mpc;
   Filename _mpc_directory;
 
+  bool _merge_externals;
+
   EggData *_egg_data;
   bool _owns_egg_data;
 
diff --git a/pandatool/src/eggbase/somethingToEgg.cxx b/pandatool/src/eggbase/somethingToEgg.cxx
index 8983ca9b2d..e7b303580b 100644
--- a/pandatool/src/eggbase/somethingToEgg.cxx
+++ b/pandatool/src/eggbase/somethingToEgg.cxx
@@ -43,6 +43,7 @@ SomethingToEgg(const string &format_name,
   _texture_path_convert = SomethingToEggConverter::PC_unchanged;
   _model_path_convert = SomethingToEggConverter::PC_unchanged;
   _append_to_sys_paths = false;
+  _merge_externals = false;
 }
 
 ////////////////////////////////////////////////////////////////////
@@ -196,6 +197,19 @@ add_search_path_options(bool append_to_sys_paths) {
      &SomethingToEgg::dispatch_search_path, &_got_search_path, &_search_path);
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: SomethingToEgg::add_merge_externals_options
+//       Access: Public
+//  Description: Adds -f.
+////////////////////////////////////////////////////////////////////
+void SomethingToEgg::
+add_merge_externals_options() {
+  add_option
+    ("f", "", 40, 
+     "Follow and convert all external references in the source file.",
+     &SomethingToEgg::dispatch_none, &_merge_externals);
+}
+
 ////////////////////////////////////////////////////////////////////
 //     Function: SomethingToEgg::apply_units_scale
 //       Access: Protected
diff --git a/pandatool/src/eggbase/somethingToEgg.h b/pandatool/src/eggbase/somethingToEgg.h
index 0b927a25eb..a67bedd101 100644
--- a/pandatool/src/eggbase/somethingToEgg.h
+++ b/pandatool/src/eggbase/somethingToEgg.h
@@ -32,6 +32,7 @@ public:
   void add_model_path_options();
   void add_rel_dir_options();
   void add_search_path_options(bool append_to_sys_paths);
+  void add_merge_externals_options();
 
 protected:
   void apply_units_scale(EggData &data);
@@ -61,6 +62,8 @@ protected:
   DSearchPath _search_path;
   bool _got_search_path;
   bool _append_to_sys_paths;
+
+  bool _merge_externals;
 };
 
 #endif
diff --git a/pandatool/src/fltegg/fltToEggConverter.cxx b/pandatool/src/fltegg/fltToEggConverter.cxx
index 20116369ce..e2462746ba 100644
--- a/pandatool/src/fltegg/fltToEggConverter.cxx
+++ b/pandatool/src/fltegg/fltToEggConverter.cxx
@@ -36,6 +36,17 @@ FltToEggConverter::
 FltToEggConverter() {
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: FltToEggConverter::Copy Constructor
+//       Access: Public
+//  Description: 
+////////////////////////////////////////////////////////////////////
+FltToEggConverter::
+FltToEggConverter(const FltToEggConverter &copy) :
+  SomethingToEggConverter(copy)
+{
+}
+
 ////////////////////////////////////////////////////////////////////
 //     Function: FltToEggConverter::Destructor
 //       Access: Public
@@ -46,6 +57,16 @@ FltToEggConverter::
   cleanup();
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: FltToEggConverter::make_copy
+//       Access: Public, Virtual
+//  Description: Allocates and returns a new copy of the converter.
+////////////////////////////////////////////////////////////////////
+SomethingToEggConverter *FltToEggConverter::
+make_copy() {
+  return new FltToEggConverter(*this);
+}
+
 
 ////////////////////////////////////////////////////////////////////
 //     Function: FltToEggConverter::get_name
@@ -371,13 +392,8 @@ convert_ext_ref(const FltExternalReference *flt_ext, FltToEggLevelState &state)
   EggGroupNode *egg_parent = 
     state.get_synthetic_group("", flt_ext->get_transform());
 
-  Filename filename = 
-    convert_model_path(flt_ext->_filename, _flt_header->get_model_path());
-
-  filename.set_extension("egg");
-
-  EggExternalReference *egg_ref = new EggExternalReference("", filename);
-  egg_parent->add_child(egg_ref);
+  handle_external_reference(egg_parent,
+			    flt_ext->_filename, _flt_header->get_model_path());
 }
 
 ////////////////////////////////////////////////////////////////////
diff --git a/pandatool/src/fltegg/fltToEggConverter.h b/pandatool/src/fltegg/fltToEggConverter.h
index 72b23a5d25..20b0185037 100644
--- a/pandatool/src/fltegg/fltToEggConverter.h
+++ b/pandatool/src/fltegg/fltToEggConverter.h
@@ -41,8 +41,11 @@ class EggPrimitive;
 class FltToEggConverter : public SomethingToEggConverter {
 public:
   FltToEggConverter();
+  FltToEggConverter(const FltToEggConverter &copy);
   ~FltToEggConverter();
 
+  virtual SomethingToEggConverter *make_copy();
+
   virtual string get_name() const;
   virtual string get_extension() const;
 
diff --git a/pandatool/src/fltprogs/fltToEgg.cxx b/pandatool/src/fltprogs/fltToEgg.cxx
index 6fdd2c2729..66851689bd 100644
--- a/pandatool/src/fltprogs/fltToEgg.cxx
+++ b/pandatool/src/fltprogs/fltToEgg.cxx
@@ -24,6 +24,7 @@ FltToEgg() :
   add_model_path_options();
   add_rel_dir_options();
   add_search_path_options(false);
+  add_merge_externals_options();
 
   set_program_description
     ("This program converts MultiGen OpenFlight (.flt) files to egg.  Most "
@@ -64,6 +65,7 @@ run() {
   }
 
   FltToEggConverter converter;
+  converter.set_merge_externals(_merge_externals);
   converter.set_egg_data(&_data, false);
   converter.set_texture_path_convert(_texture_path_convert, _make_rel_dir);
   converter.set_model_path_convert(_model_path_convert, _make_rel_dir);
diff --git a/pandatool/src/lwoegg/lwoToEggConverter.cxx b/pandatool/src/lwoegg/lwoToEggConverter.cxx
index cbd0784e99..483c4a1762 100644
--- a/pandatool/src/lwoegg/lwoToEggConverter.cxx
+++ b/pandatool/src/lwoegg/lwoToEggConverter.cxx
@@ -34,6 +34,17 @@ LwoToEggConverter() {
   _make_materials = true;
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: LwoToEggConverter::Copy Constructor
+//       Access: Public
+//  Description: 
+////////////////////////////////////////////////////////////////////
+LwoToEggConverter::
+LwoToEggConverter(const LwoToEggConverter &copy) :
+  SomethingToEggConverter(copy)
+{
+}
+
 ////////////////////////////////////////////////////////////////////
 //     Function: LwoToEggConverter::Destructor
 //       Access: Public, Virtual
@@ -44,6 +55,16 @@ LwoToEggConverter::
   cleanup();
 }
 
+////////////////////////////////////////////////////////////////////
+//     Function: LwoToEggConverter::make_copy
+//       Access: Public, Virtual
+//  Description: Allocates and returns a new copy of the converter.
+////////////////////////////////////////////////////////////////////
+SomethingToEggConverter *LwoToEggConverter::
+make_copy() {
+  return new LwoToEggConverter(*this);
+}
+
 ////////////////////////////////////////////////////////////////////
 //     Function: LwoToEggConverter::get_name
 //       Access: Public, Virtual
diff --git a/pandatool/src/lwoegg/lwoToEggConverter.h b/pandatool/src/lwoegg/lwoToEggConverter.h
index 86e8252f94..4dbc0aed9a 100644
--- a/pandatool/src/lwoegg/lwoToEggConverter.h
+++ b/pandatool/src/lwoegg/lwoToEggConverter.h
@@ -32,8 +32,11 @@ class LwoClip;
 class LwoToEggConverter : public SomethingToEggConverter {
 public:
   LwoToEggConverter();
+  LwoToEggConverter(const LwoToEggConverter &copy);
   virtual ~LwoToEggConverter();
 
+  virtual SomethingToEggConverter *make_copy();
+
   virtual string get_name() const;
   virtual string get_extension() const;
 
diff --git a/pandatool/src/ptloader/loaderFileTypePandatool.cxx b/pandatool/src/ptloader/loaderFileTypePandatool.cxx
index 861eae0dd9..49e24b5a0d 100644
--- a/pandatool/src/ptloader/loaderFileTypePandatool.cxx
+++ b/pandatool/src/ptloader/loaderFileTypePandatool.cxx
@@ -21,6 +21,7 @@ LoaderFileTypePandatool::
 LoaderFileTypePandatool(SomethingToEggConverter *converter) :
   _converter(converter)
 {
+  converter->set_merge_externals(true);
 }
 
 ////////////////////////////////////////////////////////////////////