diff --git a/lib/mongo/collection.rb b/lib/mongo/collection.rb
index 2cfecfb..8b7e149 100644
--- a/lib/mongo/collection.rb
+++ b/lib/mongo/collection.rb
@@ -314,10 +314,17 @@ module Mongo
         keys.each do |k|
           hash[k] = 1
         end
+
+        case reduce
+        when Code
+        else
+          reduce = Code.new(reduce)
+        end
+
         result = @db.db_command({"group" =>
                                   {
                                     "ns" => @name,
-                                    "$reduce" => Code.new(reduce),
+                                    "$reduce" => reduce,
                                     "key" => hash,
                                     "cond" => condition,
                                     "initial" => initial}})
@@ -327,6 +334,19 @@ module Mongo
           raise OperationFailure, "group command failed: #{result['errmsg']}"
         end
       end
+
+      case reduce
+      when Code
+        scope = reduce.scope
+      else
+        scope = {}
+      end
+      scope.merge!({
+                     "ns" => @name,
+                     "keys" => keys,
+                     "condition" => condition,
+                     "initial" => initial })
+
       group_function = <<EOS
 function () {
     var c = db[ns].find(condition);
@@ -352,13 +372,7 @@ function () {
     return {"result": map.values()};
 }
 EOS
-      return @db.eval(Code.new(group_function,
-                               {
-                                 "ns" => @name,
-                                 "keys" => keys,
-                                 "condition" => condition,
-                                 "initial" => initial
-                               }))["result"]
+      return @db.eval(Code.new(group_function, scope))["result"]
     end
 
     # Rename this collection.
diff --git a/test/test_collection.rb b/test/test_collection.rb
index 2db3a8c..aa1eb7f 100644
--- a/test/test_collection.rb
+++ b/test/test_collection.rb
@@ -186,5 +186,36 @@ class TestCollection < Test::Unit::TestCase
     assert_equal nil, @@test.find_one(:foo => "mike")
     assert_equal nil, @@test.find_one("foo" => "mike")
   end
+
+  def test_group_with_scope
+    @@test.save("a" => 1)
+    @@test.save("b" => 1)
+
+    reduce_function = "function (obj, prev) { prev.count += inc_value; }"
+
+    assert_equal 2, @@test.group([], {}, {"count" => 0},
+                                 Code.new(reduce_function,
+                                          {"inc_value" => 1}))[0]["count"]
+
+# TODO enable these tests when SERVER-262 is fixed
+
+#     assert_equal 2, @@test.group([], {}, {"count" => 0},
+#                                  Code.new(reduce_function,
+#                                           {"inc_value" => 1}), true)[0]["count"]
+
+    assert_equal 4, @@test.group([], {}, {"count" => 0},
+                                 Code.new(reduce_function,
+                                          {"inc_value" => 2}))[0]["count"]
+#     assert_equal 4, @@test.group([], {}, {"count" => 0},
+#                                  Code.new(reduce_function,
+#                                           {"inc_value" => 2}), true)[0]["count"]
+
+    assert_equal 1, @@test.group([], {}, {"count" => 0},
+                                 Code.new(reduce_function,
+                                          {"inc_value" => 0.5}))[0]["count"]
+#     assert_equal 1, @@test.group([], {}, {"count" => 0},
+#                                  Code.new(reduce_function,
+#                                           {"inc_value" => 0.5}), true)[0]["count"]
+  end
 end