diff --git a/lib/json-schema/schema.rb b/lib/json-schema/schema.rb
index 2bafd18a..d7fc482f 100644
--- a/lib/json-schema/schema.rb
+++ b/lib/json-schema/schema.rb
@@ -2,23 +2,11 @@
 
 module JSON
   class Schema
-
     attr_accessor :schema, :uri, :validator
 
-    def initialize(schema,uri,parent_validator=nil)
+    def initialize(schema, uri, parent_validator = nil)
       @schema = self.class.stringify(schema)
-      @uri = uri
-
-      # If there is an ID on this schema, use it to generate the URI
-      if @schema['id'] && @schema['id'].kind_of?(String)
-        temp_uri = URI.parse(@schema['id'])
-        if temp_uri.relative?
-          uri = uri.merge(@schema['id'])
-          temp_uri = uri
-        end
-        @uri = temp_uri
-      end
-      @uri.fragment = ''
+      @uri = generate_schema_uri(uri)
 
       # If there is a $schema on this schema, use it to determine which validator to use
       if @schema['$schema']
@@ -50,14 +38,23 @@ def self.stringify(schema)
     end
 
     def base_uri
-      parts = @uri.to_s.split('/')
-      parts.pop
-      parts.join('/') + '/'
+      @uri.merge(File.dirname(@uri.path)).to_s
     end
 
     def to_s
       @schema.to_json
     end
+
+    private
+
+    def generate_schema_uri(uri)
+      schema_uri = uri.merge('#') # Drop fragment if present
+      return schema_uri unless @schema['id'] && @schema['id'].kind_of?(String)
+
+      id_uri = URI.parse(@schema['id'])
+      return id_uri unless id_uri.relative?
+
+      schema_uri.merge(id_uri.path)
+    end
   end
 end
-
diff --git a/lib/json-schema/validator.rb b/lib/json-schema/validator.rb
index da880290..0fc2f0b7 100644
--- a/lib/json-schema/validator.rb
+++ b/lib/json-schema/validator.rb
@@ -499,10 +499,14 @@ def serialize schema
       end
     end
 
-    def fake_uuid schema
+    def fake_uuid(schema)
       @@fake_uuid_generator.call(schema)
     end
 
+    def fake_uri_for_schema(schema)
+      URI::Generic.build(:scheme => "urn", :opaque => "uuid:#{fake_uuid(schema)}")
+    end
+
     def schema_to_list(schema)
       new_schema = {"type" => "array", "items" => schema}
       if !schema["$schema"].nil?
@@ -516,7 +520,7 @@ def initialize_schema(schema)
       if schema.is_a?(String)
         begin
           # Build a fake URI for this
-          schema_uri = URI.parse(fake_uuid(schema))
+          schema_uri = fake_uri_for_schema(schema)
           schema = JSON::Validator.parse(schema)
           if @options[:list] && @options[:fragment].nil?
             schema = schema_to_list(schema)
@@ -537,7 +541,7 @@ def initialize_schema(schema)
             schema = Validator.schemas[schema_uri.to_s]
             if @options[:list] && @options[:fragment].nil?
               schema = schema_to_list(schema.schema)
-              schema_uri = URI.parse(fake_uuid(serialize(schema)))
+              schema_uri = fake_uri_for_schema(serialize(schema))
               schema = JSON::Schema.new(schema, schema_uri, @options[:version])
               Validator.add_schema(schema)
             end
@@ -548,7 +552,7 @@ def initialize_schema(schema)
         if @options[:list] && @options[:fragment].nil?
           schema = schema_to_list(schema)
         end
-        schema_uri = URI.parse(fake_uuid(serialize(schema)))
+        schema_uri = fake_uri_for_schema(serialize(schema))
         schema = JSON::Schema.new(schema,schema_uri,@options[:version])
         Validator.add_schema(schema)
       else
diff --git a/test/test_bad_schema_ref.rb b/test/test_bad_schema_ref.rb
index af004eec..b1d4761d 100644
--- a/test/test_bad_schema_ref.rb
+++ b/test/test_bad_schema_ref.rb
@@ -16,12 +16,12 @@ def test_bad_uri_ref
     schema = {
       "$schema" => "http://json-schema.org/draft-04/schema#",
       "type" => "array",
-      "items" => { "$ref" => "../google.json"}
+      "items" => { "$ref" => "{bad-scheme}://foo.com"}
     }
 
     data = [1,2,3]
-    assert_raises(URI::BadURIError) do
-      JSON::Validator.validate(schema,data)
+    assert_raises(URI::InvalidURIError) do
+      JSON::Validator.validate(schema, data)
     end
   end
 
diff --git a/test/test_list_option.rb b/test/test_list_option.rb
index 47da250b..64cb41e6 100644
--- a/test/test_list_option.rb
+++ b/test/test_list_option.rb
@@ -8,7 +8,7 @@ def test_list_option_reusing_schemas
       "properties" => { "a" => { "type" => "integer" } }
     }
 
-    uri = URI.parse('http://example.com/item')
+    uri = URI.parse('http://example.com/item#')
     schema = JSON::Schema.new(schema_hash, uri)
     JSON::Validator.add_schema(schema)
 
diff --git a/test/test_schema_validation.rb b/test/test_schema_validation.rb
index 940715e4..39132561 100644
--- a/test/test_schema_validation.rb
+++ b/test/test_schema_validation.rb
@@ -36,6 +36,14 @@ def valid_schema_v4
     }
   end
 
+  def valid_schema_v4_with_fragment_id
+    valid_schema_v4.merge("id" => "#/foo")
+  end
+
+  def valid_schema_v4_with_absolute_uri_id
+    valid_schema_v4.merge("id" => "http://www.example.invalid/#/foo")
+  end
+
   def invalid_schema_v4
     {
       "$schema" => "http://json-schema.org/draft-04/schema#",
@@ -142,6 +150,8 @@ def test_draft04_validation
     data = {"b" => {"a" => 5}}
     assert(JSON::Validator.validate(valid_schema_v4,data,:validate_schema => true, :version => :draft4))
     assert(!JSON::Validator.validate(invalid_schema_v4,data,:validate_schema => true, :version => :draft4))
+    assert(JSON::Validator.validate(valid_schema_v4_with_fragment_id,data,:validate_schema => true, :version => :draft4))
+    assert(JSON::Validator.validate(valid_schema_v4_with_absolute_uri_id,data,:validate_schema => true, :version => :draft4))
   end
 
   def test_validate_just_schema_draft04