diff --git a/its/core-it-suite/src/test/java/org/apache/maven/it/IntegrationTestSuite.java b/its/core-it-suite/src/test/java/org/apache/maven/it/IntegrationTestSuite.java
index 6963416eaf..7a3d267516 100644
--- a/its/core-it-suite/src/test/java/org/apache/maven/it/IntegrationTestSuite.java
+++ b/its/core-it-suite/src/test/java/org/apache/maven/it/IntegrationTestSuite.java
@@ -91,6 +91,7 @@ public class IntegrationTestSuite
         // suite.addTestSuite( MavenIT0109ReleaseUpdateTest.class );
         // suite.addTestSuite( MavenIT0108SnapshotUpdateTest.class ); -- MNG-3137
 
+        suite.addTestSuite( MavenITmng4126ParentProfilesXmlTest.class );
         suite.addTestSuite( MavenITmng4116UndecodedUrlsTest.class );
         suite.addTestSuite( MavenITmng4107InterpolationUsesDominantProfileSourceTest.class );
         suite.addTestSuite( MavenITmng4106InterpolationUsesDominantProfileTest.class );
diff --git a/its/core-it-suite/src/test/java/org/apache/maven/it/MavenITmng4126ParentProfilesXmlTest.java b/its/core-it-suite/src/test/java/org/apache/maven/it/MavenITmng4126ParentProfilesXmlTest.java
new file mode 100644
index 0000000000..285faff797
--- /dev/null
+++ b/its/core-it-suite/src/test/java/org/apache/maven/it/MavenITmng4126ParentProfilesXmlTest.java
@@ -0,0 +1,86 @@
+package org.apache.maven.it;
+
+/*
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements.  See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership.  The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License.  You may obtain a copy of the License at
+ *
+ *   http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied.  See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+
+import java.io.File;
+import java.util.Properties;
+
+import org.apache.maven.it.Verifier;
+import org.apache.maven.it.util.ResourceExtractor;
+
+/**
+ * This is a test set for <a href="http://jira.codehaus.org/browse/MNG-4126">MNG-4126</a>.
+ * 
+ * @author Benjamin Bentmann
+ * @version $Id$
+ */
+public class MavenITmng4126ParentProfilesXmlTest
+    extends AbstractMavenIntegrationTestCase
+{
+
+    public MavenITmng4126ParentProfilesXmlTest()
+    {
+        // MNG-4060, profiles.xml support dropped
+        super( "[2.0,2.1.0),(2.1.0,3.0-alpha-1)" );
+    }
+
+    /**
+     * Verify that effects of active profiles from the profiles.xml of a local parent are inherited by children when
+     * parent and child are build together during a reactor invocation. This boils down to the reactor cache not
+     * interfering with profile injection from profiles.xml by properly tracking the base directory of cached projects.
+     */
+    public void testitReactorBuild()
+        throws Exception
+    {
+        File testDir = ResourceExtractor.simpleExtractResources( getClass(), "/mng-4126" );
+
+        Verifier verifier = new Verifier( testDir.getAbsolutePath() );
+        verifier.setAutoclean( false );
+        verifier.deleteDirectory( "sub/target" );
+        verifier.executeGoal( "validate" );
+        verifier.verifyErrorFreeLog();
+        verifier.resetStreams();
+
+        Properties props = verifier.loadProperties( "sub/target/pom.properties" );
+        assertEquals( "PASSED", props.getProperty( "project.properties.testProperty" ) );
+    }
+
+    /**
+     * Verify that effects of active profiles from the profiles.xml of a local parent are inherited by children when
+     * parent and child are build together during a reactor invocation. This boils down to the reactor cache not
+     * interfering with profile injection from profiles.xml by properly tracking the base directory of cached projects.
+     */
+    public void testitChildOnlyBuild()
+        throws Exception
+    {
+        File testDir = ResourceExtractor.simpleExtractResources( getClass(), "/mng-4126" );
+
+        Verifier verifier = new Verifier( new File( testDir, "sub" ).getAbsolutePath() );
+        verifier.setAutoclean( false );
+        verifier.deleteDirectory( "target" );
+        verifier.executeGoal( "validate" );
+        verifier.verifyErrorFreeLog();
+        verifier.resetStreams();
+
+        Properties props = verifier.loadProperties( "target/pom.properties" );
+        assertEquals( "PASSED", props.getProperty( "project.properties.testProperty" ) );
+    }
+
+}
diff --git a/its/core-it-suite/src/test/resources/mng-4126/pom.xml b/its/core-it-suite/src/test/resources/mng-4126/pom.xml
new file mode 100644
index 0000000000..cb235067eb
--- /dev/null
+++ b/its/core-it-suite/src/test/resources/mng-4126/pom.xml
@@ -0,0 +1,40 @@
+<?xml version="1.0" encoding="UTF-8"?>
+
+<!--
+Licensed to the Apache Software Foundation (ASF) under one
+or more contributor license agreements.  See the NOTICE file
+distributed with this work for additional information
+regarding copyright ownership.  The ASF licenses this file
+to you under the Apache License, Version 2.0 (the
+"License"); you may not use this file except in compliance
+with the License.  You may obtain a copy of the License at
+
+  http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing,
+software distributed under the License is distributed on an
+"AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+KIND, either express or implied.  See the License for the
+specific language governing permissions and limitations
+under the License.
+-->
+
+<project>
+  <modelVersion>4.0.0</modelVersion>
+
+  <groupId>org.apache.maven.its.mng4126</groupId>
+  <artifactId>parent</artifactId>
+  <version>1.0-SNAPSHOT</version>
+  <packaging>pom</packaging>
+
+  <name>Maven Integration Test :: MNG-4126 :: Parent</name> 
+  <description>
+    Verify that effects of active profiles from the profiles.xml of a local parent are inherited by children when
+    parent and child are build together during a reactor invocation. This boils down to the reactor cache not
+    interfering with profile injection from profiles.xml by properly tracking the base directory of cached projects.
+  </description>
+
+  <modules>
+    <module>sub</module>
+  </modules>
+</project>
diff --git a/its/core-it-suite/src/test/resources/mng-4126/profiles.xml b/its/core-it-suite/src/test/resources/mng-4126/profiles.xml
new file mode 100644
index 0000000000..518dfe7a5f
--- /dev/null
+++ b/its/core-it-suite/src/test/resources/mng-4126/profiles.xml
@@ -0,0 +1,34 @@
+<?xml version="1.0" encoding="UTF-8"?>
+
+<!--
+Licensed to the Apache Software Foundation (ASF) under one
+or more contributor license agreements.  See the NOTICE file
+distributed with this work for additional information
+regarding copyright ownership.  The ASF licenses this file
+to you under the Apache License, Version 2.0 (the
+"License"); you may not use this file except in compliance
+with the License.  You may obtain a copy of the License at
+
+  http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing,
+software distributed under the License is distributed on an
+"AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+KIND, either express or implied.  See the License for the
+specific language governing permissions and limitations
+under the License.
+-->
+
+<profilesXml xmlns="http://maven.apache.org/xsd/profiles-1.0.0.xsd" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xsi:schemaLocation="http://maven.apache.org/xsd/profiles-1.0.0.xsd">
+  <profiles>
+    <profile>
+      <id>active</id>
+      <properties>
+        <testProperty>PASSED</testProperty>
+      </properties>
+    </profile>
+  </profiles>
+  <activeProfiles>
+    <activeProfile>active</activeProfile>
+  </activeProfiles>
+</profilesXml>
diff --git a/its/core-it-suite/src/test/resources/mng-4126/sub/pom.xml b/its/core-it-suite/src/test/resources/mng-4126/sub/pom.xml
new file mode 100644
index 0000000000..d89e57561a
--- /dev/null
+++ b/its/core-it-suite/src/test/resources/mng-4126/sub/pom.xml
@@ -0,0 +1,65 @@
+<?xml version="1.0" encoding="UTF-8"?>
+
+<!--
+Licensed to the Apache Software Foundation (ASF) under one
+or more contributor license agreements.  See the NOTICE file
+distributed with this work for additional information
+regarding copyright ownership.  The ASF licenses this file
+to you under the Apache License, Version 2.0 (the
+"License"); you may not use this file except in compliance
+with the License.  You may obtain a copy of the License at
+
+  http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing,
+software distributed under the License is distributed on an
+"AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+KIND, either express or implied.  See the License for the
+specific language governing permissions and limitations
+under the License.
+-->
+
+<project>
+  <modelVersion>4.0.0</modelVersion>
+
+  <parent>
+    <groupId>org.apache.maven.its.mng4126</groupId>
+    <artifactId>parent</artifactId>
+    <version>1.0-SNAPSHOT</version>
+  </parent>
+
+  <groupId>org.apache.maven.its.mng4126</groupId>
+  <artifactId>child</artifactId>
+  <version>1.0-SNAPSHOT</version>
+
+  <name>Maven Integration Test :: MNG-4126 :: Child</name> 
+  <description>
+    Verify that effects of active profiles from the profiles.xml of a local parent are inherited by children when
+    parent and child are build together during a reactor invocation. This boils down to the reactor cache not
+    interfering with profile injection from profiles.xml by properly tracking the base directory of cached projects.
+  </description>
+
+  <build>
+    <plugins>
+      <plugin>
+        <groupId>org.apache.maven.its.plugins</groupId>
+        <artifactId>maven-it-plugin-expression</artifactId>
+        <version>2.1-SNAPSHOT</version>
+        <executions>
+          <execution>
+            <phase>validate</phase>
+            <goals>
+              <goal>eval</goal>
+            </goals>
+            <configuration>
+              <outputFile>target/pom.properties</outputFile>
+              <expressions>
+                <expression>project/properties</expression>
+              </expressions>
+            </configuration>
+          </execution>
+        </executions>
+      </plugin>
+    </plugins>
+  </build>
+</project>