diff --git a/src/com/android/launcher3/pageindicators/PageIndicatorLineCaret.java b/src/com/android/launcher3/pageindicators/PageIndicatorLineCaret.java
index 0b94791..0d771ad 100644
--- a/src/com/android/launcher3/pageindicators/PageIndicatorLineCaret.java
+++ b/src/com/android/launcher3/pageindicators/PageIndicatorLineCaret.java
@@ -9,14 +9,12 @@
 import android.graphics.Canvas;
 import android.graphics.Color;
 import android.graphics.Paint;
-import android.graphics.Rect;
 import android.os.Handler;
 import android.os.Looper;
 import android.support.v4.graphics.ColorUtils;
 import android.util.AttributeSet;
 import android.util.Log;
 import android.util.Property;
-import android.view.TouchDelegate;
 import android.view.View;
 import android.view.ViewConfiguration;
 
@@ -24,6 +22,7 @@
 import com.android.launcher3.R;
 import com.android.launcher3.Utilities;
 import com.android.launcher3.dynamicui.ExtractedColors;
+import com.android.launcher3.util.TransformingTouchDelegate;
 
 /**
  * A PageIndicator that briefly shows a fraction of a line when moving between pages.
@@ -61,7 +60,7 @@
     private Paint mLinePaint;
     private Launcher mLauncher;
     private final int mLineHeight;
-    private final Rect mTouchHitRect = new Rect();
+    private final TransformingTouchDelegate mTouchDelegate;
     private final int mTouchExtensionHeight;
     private final int mCaretSizePx;
     private final int mCaretWorkspaceOffsetPx;
@@ -142,6 +141,13 @@
         mLineHeight = res.getDimensionPixelSize(R.dimen.dynamic_grid_page_indicator_line_height);
         mTouchExtensionHeight = res.getDimensionPixelSize(
                 R.dimen.dynamic_grid_page_indicator_extra_touch_height);
+        mTouchDelegate = new TransformingTouchDelegate(this);
+    }
+
+    @Override
+    protected void onAttachedToWindow() {
+        super.onAttachedToWindow();
+        mLauncher.getDragLayer().setTouchDelegate(mTouchDelegate);
     }
 
     @Override
@@ -157,9 +163,8 @@
         View parent = mLauncher.getDragLayer();
         sTempCoords[0] = sTempCoords[1] = 0;
         Utilities.getDescendantCoordRelativeToAncestor(this, parent, sTempCoords, true);
-        mTouchHitRect.set(sTempCoords[0], sTempCoords[1], sTempCoords[0] + this.getWidth(),
+        mTouchDelegate.setBounds(sTempCoords[0], sTempCoords[1], sTempCoords[0] + this.getWidth(),
                 sTempCoords[1] + getHeight() + mTouchExtensionHeight);
-        parent.setTouchDelegate(new TouchDelegate(mTouchHitRect, this));
     }
 
     @Override
diff --git a/src/com/android/launcher3/shortcuts/DeepShortcutsContainer.java b/src/com/android/launcher3/shortcuts/DeepShortcutsContainer.java
index 4f67e46..38567f3 100644
--- a/src/com/android/launcher3/shortcuts/DeepShortcutsContainer.java
+++ b/src/com/android/launcher3/shortcuts/DeepShortcutsContainer.java
@@ -92,6 +92,8 @@
     private boolean mIsAboveIcon;
     private boolean mIsAnimatingOpen;
 
+    private boolean mSrcIconDragStarted;
+
     /**
      * Sorts shortcuts in rank order, with manifest shortcuts coming before dynamic shortcuts.
      */
@@ -357,7 +359,8 @@
 
             boolean containerContainsTouch = x >= 0 && y >= 0 && x < getWidth() && y < getHeight();
             if (shouldStartDeferredDrag((int) x, (int) y, containerContainsTouch)) {
-                cleanupDeferredDrag();
+                mSrcIconDragStarted = true;
+                cleanupDeferredDrag(true);
                 mDeferredDragIcon.getParent().requestDisallowInterceptTouchEvent(false);
                 mDeferredDragIcon.getOnLongClickListener().onLongClick(mDeferredDragIcon);
                 mLauncher.getDragController().onTouchEvent(ev);
@@ -387,7 +390,7 @@
                 }
             }
         } else if (action == MotionEvent.ACTION_UP) {
-            cleanupDeferredDrag();
+            cleanupDeferredDrag(true);
             // Launch a shortcut if user was hovering over it.
             for (int i = 0; i < childCount; i++) {
                 DeepShortcutView shortcut = getShortcutAt(i);
@@ -397,7 +400,8 @@
                 }
             }
         } else if (action == MotionEvent.ACTION_CANCEL) {
-            cleanupDeferredDrag();
+            // Do not change the source icon visibility if we are already dragging the source icon.
+            cleanupDeferredDrag(!mSrcIconDragStarted);
         }
         return true;
     }
@@ -422,11 +426,13 @@
         return !containerContainsTouch && (newDistToEdge - distToEdge > mStartDragThreshold);
     }
 
-    public void cleanupDeferredDrag() {
+    public void cleanupDeferredDrag(boolean updateSrcVisibility) {
         if (mDragView != null) {
             mDragView.remove();
         }
-        mDeferredDragIcon.setVisibility(VISIBLE);
+        if (updateSrcVisibility) {
+            mDeferredDragIcon.setVisibility(VISIBLE);
+        }
     }
 
     @Override
diff --git a/src/com/android/launcher3/util/TransformingTouchDelegate.java b/src/com/android/launcher3/util/TransformingTouchDelegate.java
new file mode 100644
index 0000000..da1de5e
--- /dev/null
+++ b/src/com/android/launcher3/util/TransformingTouchDelegate.java
@@ -0,0 +1,87 @@
+/*
+ * Copyright (C) 2016 The Android Open Source Project
+ *
+ * Licensed 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.
+ */
+package com.android.launcher3.util;
+
+import android.graphics.Rect;
+import android.graphics.RectF;
+import android.view.MotionEvent;
+import android.view.TouchDelegate;
+import android.view.View;
+
+/**
+ * This class differs from the framework {@link TouchDelegate} in that it transforms the
+ * coordinates of the motion event to the provided bounds.
+ *
+ * You can also modify the bounds post construction. Since the bounds are available during layout,
+ * this avoids new object creation during every layout.
+ */
+public class TransformingTouchDelegate extends TouchDelegate {
+    private static final Rect sTempRect = new Rect();
+
+    private final RectF mBounds;
+
+    private View mDelegateView;
+    private boolean mDelegateTargeted;
+
+    public TransformingTouchDelegate(View delegateView) {
+        super(sTempRect, delegateView);
+
+        mDelegateView = delegateView;
+        mBounds = new RectF();
+    }
+
+    public void setBounds(int left, int top, int right, int bottom) {
+        mBounds.set(left, top, right, bottom);
+    }
+
+    public void setDelegateView(View view) {
+        mDelegateView = view;
+    }
+
+    /**
+     * Will forward touch events to the delegate view if the event is within the bounds
+     * specified in the constructor.
+     *
+     * @param event The touch event to forward
+     * @return True if the event was forwarded to the delegate, false otherwise.
+     */
+    public boolean onTouchEvent(MotionEvent event) {
+        boolean sendToDelegate = false;
+        switch (event.getAction()) {
+            case MotionEvent.ACTION_DOWN:
+                mDelegateTargeted = mBounds.contains(event.getX(), event.getY());
+                if (mDelegateTargeted) {
+                    sendToDelegate = true;
+                }
+                break;
+            case MotionEvent.ACTION_MOVE:
+                sendToDelegate = mDelegateTargeted;
+                break;
+            case MotionEvent.ACTION_UP:
+            case MotionEvent.ACTION_CANCEL:
+                sendToDelegate = mDelegateTargeted;
+                mDelegateTargeted = false;
+                break;
+        }
+        boolean handled = false;
+        if (sendToDelegate) {
+            event.offsetLocation(-mBounds.left, -mBounds.top);
+            handled = mDelegateView.dispatchTouchEvent(event);
+            event.offsetLocation(mBounds.left, mBounds.top);
+        }
+        return handled;
+    }
+}