diff --git a/lib/propshaft/assembly.rb b/lib/propshaft/assembly.rb
index 3fbb11c..3eb5537 100644
--- a/lib/propshaft/assembly.rb
+++ b/lib/propshaft/assembly.rb
@@ -6,6 +6,7 @@
 require "propshaft/compilers"
 require "propshaft/compiler/css_asset_urls"
 require "propshaft/compiler/source_mapping_urls"
+require "propshaft/dependency_tree"
 
 class Propshaft::Assembly
   attr_reader :config
@@ -15,7 +16,7 @@ def initialize(config)
   end
 
   def load_path
-    @load_path ||= Propshaft::LoadPath.new(config.paths, version: config.version)
+    @load_path ||= Propshaft::LoadPath.new(config.paths, version: config.version, dependency_tree: dependency_tree)
   end
 
   def resolver
@@ -26,6 +27,10 @@ def resolver
     end
   end
 
+  def dependency_tree
+    Propshaft::DependencyTree.new(compilers: compilers)
+  end
+
   def server
     Propshaft::Server.new(self)
   end
diff --git a/lib/propshaft/asset.rb b/lib/propshaft/asset.rb
index 759523f..26e053a 100644
--- a/lib/propshaft/asset.rb
+++ b/lib/propshaft/asset.rb
@@ -3,9 +3,12 @@
 
 class Propshaft::Asset
   attr_reader :path, :logical_path, :version
+  attr_accessor :dependencies, :dependency_fingerprint
 
   def initialize(path, logical_path:, version: nil)
     @path, @logical_path, @version = path, Pathname.new(logical_path), version
+    @dependencies = nil
+    @dependency_fingerprint = nil
   end
 
   def content
@@ -16,12 +19,27 @@ def content_type
     Mime::Type.lookup_by_extension(logical_path.extname.from(1))
   end
 
+  def may_depend?
+    content_type&.symbol == :css
+  end
+
   def length
     content.size
   end
 
+  # A dependency aware digest can be calculated for any asset that has no dependencies or
+  # that has had its dependency fingerprint set by DependencyTree.
+  # If it's too soon, we can still calculate the digest based on file contents,
+  # but there won't be any dependency cache busting.
+  def digest_too_soon?
+    may_depend? && dependencies&.any? && !dependency_fingerprint
+  end
+
   def digest
-    @digest ||= Digest::SHA1.hexdigest("#{content}#{version}").first(8)
+    @digest ||= begin
+      Propshaft.logger.warn("digest dependencies not ready for #{logical_path}") if digest_too_soon?
+      Digest::SHA1.hexdigest("#{content}#{version}#{dependency_fingerprint}").first(8)
+    end
   end
 
   def digested_path
diff --git a/lib/propshaft/compiler.rb b/lib/propshaft/compiler.rb
index b60dd65..7471a66 100644
--- a/lib/propshaft/compiler.rb
+++ b/lib/propshaft/compiler.rb
@@ -13,6 +13,10 @@ def compile(logical_path, input)
     raise NotImplementedError
   end
 
+  def find_dependencies(logical_path, input)
+    Set.new
+  end
+
   private
     def url_prefix
       @url_prefix ||= File.join(assembly.config.relative_url_root.to_s, assembly.config.prefix.to_s).chomp("/")
diff --git a/lib/propshaft/compiler/css_asset_urls.rb b/lib/propshaft/compiler/css_asset_urls.rb
index b263b7d..8c39295 100644
--- a/lib/propshaft/compiler/css_asset_urls.rb
+++ b/lib/propshaft/compiler/css_asset_urls.rb
@@ -9,6 +9,14 @@ def compile(logical_path, input)
     input.gsub(ASSET_URL_PATTERN) { asset_url resolve_path(logical_path.dirname, $1), logical_path, $2, $1 }
   end
 
+  def find_dependencies(logical_path, input)
+    Set.new.tap do |deps|
+      input.scan(ASSET_URL_PATTERN).each do |fn, _|
+        deps << resolve_path(logical_path.dirname, fn)
+      end
+    end
+  end
+
   private
     def resolve_path(directory, filename)
       if filename.start_with?("../")
diff --git a/lib/propshaft/compilers.rb b/lib/propshaft/compilers.rb
index c44d840..79fa6fe 100644
--- a/lib/propshaft/compilers.rb
+++ b/lib/propshaft/compilers.rb
@@ -30,4 +30,14 @@ def compile(asset)
       asset.content
     end
   end
+
+  def find_dependencies(asset)
+    Set.new.tap do |deps|
+      if relevant_registrations = registrations[asset.content_type.to_s]
+        relevant_registrations.each do |compiler|
+          deps.merge compiler.new(assembly).find_dependencies(asset.logical_path, asset.content)
+        end
+      end
+    end
+  end
 end
diff --git a/lib/propshaft/dependency_tree.rb b/lib/propshaft/dependency_tree.rb
new file mode 100644
index 0000000..2ca29a6
--- /dev/null
+++ b/lib/propshaft/dependency_tree.rb
@@ -0,0 +1,61 @@
+class Propshaft::DependencyTree
+
+  def initialize(compilers:)
+    @compilers = compilers
+  end
+
+  # a single pass through the dependent assets, calculating all the dependency
+  # fingerprints we can.
+  def dependency_fingerprint_pass(dependent_assets)
+    dependent_assets.each do |asset|
+      # the fingerprint can be calculated unless a dependency of this asset
+      # is not ready yet.
+      next if asset.dependencies.detect{|da| da.digest_too_soon?}
+      # ok, ready to set the fingerprint, which is the concatenation of the
+      # digests of each dependent asset.
+      # the fingerprints need to maintain a stable order, done via the sort.
+      asset.dependency_fingerprint = asset.dependencies.map(&:digest).sort.join
+    end
+    # clear out any ones we are done with.
+    dependent_assets.delete_if{|asset| asset.dependency_fingerprint.present?}
+  end
+
+  # After we know the assets that depend on other propshaft assets, we can iterate
+  # through the list, calculating the dependency fingerprint for any asset with
+  # children with known digests.  Once we run out of dependent assets without
+  # digests, we are done.  But if we notice that we aren't making any progress on
+  # an iteration, it means there is an asset dependency cycle.  In that case we
+  # bail out and warn.
+  def set_dependency_fingerprints(dependent_assets)
+    # There will be N iterations where N is the depth of the longest dependency chain.
+    loop do
+      initial_count = dependent_assets.size
+      dependency_fingerprint_pass(dependent_assets)
+      break if dependent_assets.empty?    # success, all done
+      if dependent_assets.size == initial_count
+        # failing to make progress
+        cyclic_assets = dependent_assets.map{|a| a.logical_path.to_s}.join(', ')
+        Propshaft.logger.warn "Dependency cycle between #{cyclic_assets}"
+        break
+      end
+    end
+  end
+
+  def traverse(mapped)
+    dependent_assets = Set.new
+    mapped.each_pair do |path, asset|
+      next unless asset.may_depend?     # skip static asset types
+      # get logical paths of dependencies
+      deps = @compilers.find_dependencies(asset)
+      # convert logical paths to asset objects
+      # asset references that aren't managed by propshaft will not be in the mapping
+      # and can be ignored since they won't have digests
+      asset.dependencies = deps.map{|d| mapped[d]}.compact
+      # If no dependencies, the normal digest will be fine for this asset.
+      # Otherwise we will need to perform dependency tree traversal to
+      # create dependency-aware digests. Keep a list of such assets to visit.
+      dependent_assets << asset if asset.dependencies.any?
+    end
+    set_dependency_fingerprints(dependent_assets)
+  end
+end
diff --git a/lib/propshaft/load_path.rb b/lib/propshaft/load_path.rb
index ab236b2..e6e2c52 100644
--- a/lib/propshaft/load_path.rb
+++ b/lib/propshaft/load_path.rb
@@ -3,9 +3,10 @@
 class Propshaft::LoadPath
   attr_reader :paths, :version
 
-  def initialize(paths = [], version: nil)
-    @paths   = dedup(paths)
-    @version = version
+  def initialize(paths = [], version: nil, dependency_tree: nil)
+    @paths           = dedup(paths)
+    @version         = version
+    @dependency_tree = dependency_tree
   end
 
   def find(asset_name)
@@ -51,6 +52,7 @@ def assets_by_path
             mapped[logical_path.to_s] ||= Propshaft::Asset.new(file, logical_path: logical_path, version: version)
           end if path.exist?
         end
+        @dependency_tree&.traverse(mapped)
       end
     end
 
diff --git a/test/fixtures/assets/dependent/child1.css b/test/fixtures/assets/dependent/child1.css
new file mode 100644
index 0000000..0ce6e22
--- /dev/null
+++ b/test/fixtures/assets/dependent/child1.css
@@ -0,0 +1 @@
+@import url('child2.css');
diff --git a/test/fixtures/assets/dependent/child2.css b/test/fixtures/assets/dependent/child2.css
new file mode 100644
index 0000000..bd6c258
--- /dev/null
+++ b/test/fixtures/assets/dependent/child2.css
@@ -0,0 +1 @@
+p { background: blue; }
diff --git a/test/fixtures/assets/dependent/cyclic1.css b/test/fixtures/assets/dependent/cyclic1.css
new file mode 100644
index 0000000..8e212a0
--- /dev/null
+++ b/test/fixtures/assets/dependent/cyclic1.css
@@ -0,0 +1 @@
+@import url('cyclic2.css');
diff --git a/test/fixtures/assets/dependent/cyclic2.css b/test/fixtures/assets/dependent/cyclic2.css
new file mode 100644
index 0000000..2717edc
--- /dev/null
+++ b/test/fixtures/assets/dependent/cyclic2.css
@@ -0,0 +1 @@
+@import url('cyclic1.css');
diff --git a/test/fixtures/assets/dependent/main.css b/test/fixtures/assets/dependent/main.css
new file mode 100644
index 0000000..d4dda30
--- /dev/null
+++ b/test/fixtures/assets/dependent/main.css
@@ -0,0 +1 @@
+@import url('child1.css');
diff --git a/test/propshaft/dependency_tree_test.rb b/test/propshaft/dependency_tree_test.rb
new file mode 100644
index 0000000..7ef4997
--- /dev/null
+++ b/test/propshaft/dependency_tree_test.rb
@@ -0,0 +1,42 @@
+require "test_helper"
+require "minitest/mock"
+require "propshaft/asset"
+require "propshaft/assembly"
+require "propshaft/compilers"
+
+class Propshaft::DependencyTreeTest < ActiveSupport::TestCase
+  setup do
+    @assembly = Propshaft::Assembly.new(ActiveSupport::OrderedOptions.new.tap { |config|
+      config.paths = [ Pathname.new("#{__dir__}/../fixtures/assets/dependent") ]
+      config.output_path = Pathname.new("#{__dir__}/../fixtures/output")
+      config.prefix = "/assets"
+    })
+    @assembly.compilers.register "text/css", Propshaft::Compiler::CssAssetUrls
+  end
+
+  test "cyclic assets do not cause a loop" do
+    @assembly.load_path.assets
+  end
+
+  def write_child2(col)
+    File.open("#{__dir__}/../fixtures/assets/dependent/child2.css", "w") do |file|
+      file.puts "p { background: #{col}; }"
+    end
+  end
+
+  test "modification of a child affects dependent asset digests" do
+    write_child2('blue')    # ensure no leftovers from previous runs
+    prev_assets = @assembly.load_path.assets
+    prev_main_digest = prev_assets.detect{|a| a.logical_path.to_s == 'main.css'}.digest
+    write_child2('red')
+    @assembly.load_path.cache_sweeper.execute
+    changed_assets = @assembly.load_path.assets
+    changed_main_digest = changed_assets.detect{|a| a.logical_path.to_s == 'main.css'}.digest
+    assert_not_equal(prev_main_digest, changed_main_digest)
+    write_child2('blue')    # restore the original
+    @assembly.load_path.cache_sweeper.execute
+    final_assets = @assembly.load_path.assets
+    final_main_digest = final_assets.detect{|a| a.logical_path.to_s == 'main.css'}.digest
+    assert_equal(prev_main_digest, final_main_digest)
+  end
+end