diff --git a/CHANGELOG b/CHANGELOG
index 3806eed..2c64bc4 100644
--- a/CHANGELOG
+++ b/CHANGELOG
@@ -1,5 +1,7 @@
 *SVN*
 
+* Event handlers are now bound to the observed element, not the event's target element.  [Dan Webb]
+
 * Define Node constants conditionally after checking for Node.ELEMENT_NODE presence.  Add unit test to check the values of all constants.  Closes #7625.  [Mislav Marohnić]
 
 * Make sure Enumerable#include doesn't do type comparision.  [Mislav Marohnić]
diff --git a/src/event.js b/src/event.js
index eba3da7..ad095e6 100644
--- a/src/event.js
+++ b/src/event.js
@@ -127,7 +127,8 @@ Object.extend(Event, (function() {
     return c[eventName] = c[eventName] || [];
   }
   
-  function createWrapper(id, eventName, handler) {
+  function createWrapper(element, eventName, handler) {
+    var id = getEventID(element);
     var c = getWrappersForEventName(id, eventName);
     if (c.pluck("handler").include(handler)) return false;
     
@@ -136,7 +137,7 @@ Object.extend(Event, (function() {
         return false;
       
       Event.extend(event);
-      handler.call(event.target, event);
+      handler.call(element, event)
     };
     
     wrapper.handler = handler;
@@ -168,9 +169,9 @@ Object.extend(Event, (function() {
   return {
     observe: function(element, eventName, handler) {
       element = $(element);
-      var id = getEventID(element), name = getDOMEventName(eventName);
+      var name = getDOMEventName(eventName);
       
-      var wrapper = createWrapper(id, eventName, handler);
+      var wrapper = createWrapper(element, eventName, handler);
       if (!wrapper) return element;
       
       if (element.addEventListener) {
diff --git a/test/unit/event.html b/test/unit/event.html
index df761a4..1e7af77 100644
--- a/test/unit/event.html
+++ b/test/unit/event.html
@@ -113,7 +113,7 @@
       span.stopObserving("somethingHappened", observer);
     }},
     
-    testEventObserversAreBoundToTheTargetElement: function() { with(this) {
+    testEventObserversAreBoundToTheObservedElement: function() { with(this) {
       var span = $("span"), target, observer = function() { target = this };
       
       span.observe("somethingHappened", observer);
@@ -126,7 +126,7 @@
       outer.observe("somethingHappened", observer);
       span.fire("somethingHappened");
       outer.stopObserving("somethingHappened", observer);
-      assertEqual(span, target);
+      assertEqual(outer, target);
     }},
     
     testMultipleCustomEventObserversWithTheSameHandler: function() { with(this) {