diff --git a/src/iasm.c b/src/iasm.c
index 6d5315b596c3..d91fdf115a7f 100644
--- a/src/iasm.c
+++ b/src/iasm.c
@@ -1383,38 +1383,45 @@ static code *asm_emit(Loc loc,
                         popndTmp->pregDisp2 &&
                         popndTmp->pregDisp2->val == _BP)
                         usDefaultseg = _SS;
+                else if (asmstate.ucItype == ITjump)
+                        usDefaultseg = _CS;
                 else
                         usDefaultseg = _DS;
                 if (pregSegment->val != usDefaultseg)
-                    switch (pregSegment->val)
-                    {
-                    case _CS:
-                        emit(0x2e);
-                        pc->Iflags |= CFcs;
-                        break;
-                    case _SS:
-                        emit(0x36);
-                        pc->Iflags |= CFss;
-                        break;
-                    case _DS:
-                        emit(0x3e);
-                        pc->Iflags |= CFds;
-                        break;
-                    case _ES:
-                        emit(0x26);
-                        pc->Iflags |= CFes;
-                        break;
-                    case _FS:
-                        emit(0x64);
-                        pc->Iflags |= CFfs;
-                        break;
-                    case _GS:
-                        emit(0x65);
-                        pc->Iflags |= CFgs;
-                        break;
-                    default:
-                        assert(0);
-                    }
+                {
+                    if (asmstate.ucItype == ITjump)
+                        error(asmstate.loc, "Cannot generate a segment prefix for a branching instruction");
+                    else
+                        switch (pregSegment->val)
+                        {
+                        case _CS:
+                            emit(0x2e);
+                            pc->Iflags |= CFcs;
+                            break;
+                        case _SS:
+                            emit(0x36);
+                            pc->Iflags |= CFss;
+                            break;
+                        case _DS:
+                            emit(0x3e);
+                            pc->Iflags |= CFds;
+                            break;
+                        case _ES:
+                            emit(0x26);
+                            pc->Iflags |= CFes;
+                            break;
+                        case _FS:
+                            emit(0x64);
+                            pc->Iflags |= CFfs;
+                            break;
+                        case _GS:
+                            emit(0x65);
+                            pc->Iflags |= CFgs;
+                            break;
+                        default:
+                            assert(0);
+                        }
+                }
             }
             break;
     }
@@ -4311,6 +4318,8 @@ static OPND *asm_primary_exp()
                     o1->segreg = regp;
                     asm_token();
                     o2 = asm_cond_exp();
+                    if (o2->s && o2->s->isLabel())
+                        o2->segreg = NULL; // The segment register was specified explicitly.
                     o1 = asm_merge_opnds(o1, o2);
                 }
                 else if (asm_TKlbra_seen)
@@ -4354,23 +4363,18 @@ static OPND *asm_primary_exp()
             }
             else
             {
-                if (asmstate.ucItype == ITjump)
-                {
-                    s = NULL;
-                    if (asmstate.sc->func->labtab)
-                        s = asmstate.sc->func->labtab->lookup(asmtok->ident);
-                    if (!s)
-                        s = asmstate.sc->search(Loc(), asmtok->ident, &scopesym);
-                    if (!s)
-                    {
-                        // Assume it is a label, and define that label
-                        s = asmstate.sc->func->searchLabel(asmtok->ident);
-                    }
-                }
-                else
+                s = NULL;
+                if (asmstate.sc->func->labtab)
+                    s = asmstate.sc->func->labtab->lookup(asmtok->ident);
+                if (!s)
                     s = asmstate.sc->search(Loc(), asmtok->ident, &scopesym);
                 if (!s)
-                    asmerr("undefined identifier '%s'", asmtok->toChars());
+                {
+                    // Assume it is a label, and define that label
+                    s = asmstate.sc->func->searchLabel(asmtok->ident);
+                }
+                if (s->isLabel())
+                    o1->segreg = &regtab[25]; // Make it use CS as a base for a label
 
                 Identifier *id = asmtok->ident;
                 asm_token();
diff --git a/test/compilable/iasm_labeloperand.d b/test/compilable/iasm_labeloperand.d
new file mode 100644
index 000000000000..f46ba00edd19
--- /dev/null
+++ b/test/compilable/iasm_labeloperand.d
@@ -0,0 +1,35 @@
+
+version (D_InlineAsm_X86)
+    version = TestInlineAsm;
+else version (D_InlineAsm_X86_64)
+    version = TestInlineAsm;
+else
+    pragma(msg, "Inline asm not supported, not testing.");
+
+version (TestInlineAsm)
+{
+    void testInlineAsm()
+    {
+        asm
+        {
+		L1:
+			nop;
+			nop;
+			nop;
+			nop;
+			
+			mov EAX, dword ptr L1; // Check back references
+			mov EAX, dword ptr L2; // Check forward references
+			mov EAX, dword ptr DS:L1; // Not really useful in standard use, but who knows.
+			mov EAX, dword ptr FS:L2; // Once again, not really useful, but it is valid.
+			mov EAX, dword ptr CS:L1; // This is what the first test case should implicitly be.
+			
+		L2:
+			nop;
+			nop;
+			nop;
+			nop;
+			
+        }
+    }
+}
diff --git a/test/fail_compilation/fail12635.d b/test/fail_compilation/fail12635.d
new file mode 100644
index 000000000000..b00cc47b3009
--- /dev/null
+++ b/test/fail_compilation/fail12635.d
@@ -0,0 +1,21 @@
+/*
+TEST_OUTPUT:
+---
+fail_compilation/fail12635.d(19): Error: Cannot generate a segment prefix for a branching instruction
+---
+*/
+
+void foo()
+{
+    enum NOP = 0x9090_9090_9090_9090;
+
+    asm
+    {
+    L1:
+        dq NOP,NOP,NOP,NOP;    //  32
+        dq NOP,NOP,NOP,NOP;    //  64
+        dq NOP,NOP,NOP,NOP;    //  96
+        dq NOP,NOP,NOP,NOP;    // 128
+        jmp DS:L1;
+    }
+}