--- a/browser/base/content/tabview/groupitems.js
+++ b/browser/base/content/tabview/groupitems.js
@@ -562,17 +562,16 @@ GroupItem.prototype = Utils.extend(new I
     }
     this.deleteData();
   },
 
   // ----------
   // Function: closeAll
   // Closes the groupItem and all of its children.
   closeAll: function GroupItem_closeAll() {
-    let closeCenter = this.getBounds().center();
     if (this._children.length > 0) {
       this._children.forEach(function(child) {
         iQ(child.container).hide();
       });
 
       iQ(this.container).animate({
          opacity: 0,
          "-moz-transform": "scale(.3)",
@@ -583,16 +582,26 @@ GroupItem.prototype = Utils.extend(new I
         }
       });
 
       this._createUndoButton();
     } else {
       if (!this.locked.close)
         this.close();
     }
+    
+    this._makeClosestTabActive();
+  },
+  
+  // ----------
+  // Function: _makeClosestTabActive
+  // Make the closest tab external to this group active.
+  // Used when closing the group.
+  _makeClosestTabActive: function GroupItem__makeClosestTabActive() {
+    let closeCenter = this.getBounds().center();
     // Find closest tab to make active
     let closestTabItem = UI.getClosestTab(closeCenter);
     UI.setActiveTab(closestTabItem);
 
     // set the active group or orphan tabitem.
     if (closestTabItem) {
       if (closestTabItem.parent) {
         GroupItems.setActiveGroupItem(closestTabItem.parent);
@@ -938,16 +947,17 @@ GroupItem.prototype = Utils.extend(new I
 
       if (typeof item.setResizable == 'function')
         item.setResizable(true, options.immediately);
 
       if (this._children.length == 0 && !this.locked.close && !this.getTitle() && 
           !options.dontClose) {
         if (!GroupItems.getUnclosableGroupItemId()) {
           this.close();
+          this._makeClosestTabActive();
         } else {
           // this.close();  this line is causing the leak but the leak doesn't happen after re-enabling it
         }
       } else if (!options.dontArrange) {
         this.arrange({animate: !options.immediately});
       }
 
       this._sendToSubscribers("childRemoved",{ groupItemId: this.id, item: item });

--- a/browser/base/content/test/tabview/Makefile.in
+++ b/browser/base/content/test/tabview/Makefile.in
@@ -84,16 +84,17 @@ include $(topsrcdir)/config/rules.mk
                  browser_tabview_bug616729.js \
                  browser_tabview_bug616967.js \
                  browser_tabview_bug618828.js \
                  browser_tabview_bug619937.js \
                  browser_tabview_bug622835.js \
                  browser_tabview_bug624265.js \
                  browser_tabview_bug624953.js \
                  browser_tabview_bug625269.js \
+                 browser_tabview_bug627736.js \
                  browser_tabview_dragdrop.js \
                  browser_tabview_exit_button.js \
                  browser_tabview_expander.js \
                  browser_tabview_group.js \
                  browser_tabview_launch.js \
                  browser_tabview_multiwindow_search.js \
                  browser_tabview_orphaned_tabs.js \
                  browser_tabview_privatebrowsing.js \

new file mode 100644
--- /dev/null
+++ b/browser/base/content/test/tabview/browser_tabview_bug627736.js
@@ -0,0 +1,95 @@
+/* ***** BEGIN LICENSE BLOCK *****
+ * Version: MPL 1.1/GPL 2.0/LGPL 2.1
+ *
+ * The contents of this file are subject to the Mozilla Public License Version
+ * 1.1 (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.mozilla.org/MPL/
+ *
+ * Software distributed under the License is distributed on an "AS IS" basis,
+ * WITHOUT WARRANTY OF ANY KIND, either express or implied. See the License
+ * for the specific language governing rights and limitations under the
+ * License.
+ *
+ * The Original Code is Panorama bug 627736 (post-group close focus) test.
+ *
+ * The Initial Developer of the Original Code is
+ * Mozilla Foundation.
+ * Portions created by the Initial Developer are Copyright (C) 2010
+ * the Initial Developer. All Rights Reserved.
+ *
+ * Contributor(s):
+ * Michael Yoshitaka Erlewine <mitcho@mitcho.com>
+ *
+ * Alternatively, the contents of this file may be used under the terms of
+ * either the GNU General Public License Version 2 or later (the "GPL"), or
+ * the GNU Lesser General Public License Version 2.1 or later (the "LGPL"),
+ * in which case the provisions of the GPL or the LGPL are applicable instead
+ * of those above. If you wish to allow use of your version of this file only
+ * under the terms of either the GPL or the LGPL, and not to allow others to
+ * use your version of this file under the terms of the MPL, indicate your
+ * decision by deleting the provisions above and replace them with the notice
+ * and other provisions required by the GPL or the LGPL. If you do not delete
+ * the provisions above, a recipient may use your version of this file under
+ * the terms of any one of the MPL, the GPL or the LGPL.
+ *
+ * ***** END LICENSE BLOCK ***** */
+
+function test() {
+  waitForExplicitFinish();
+  newWindowWithTabView(onTabViewWindowLoaded);
+}
+
+function onTabViewWindowLoaded(win) {
+  ok(win.TabView.isVisible(), "Tab View is visible");
+
+  let contentWindow = win.document.getElementById("tab-view").contentWindow;
+  let [originalTab] = win.gBrowser.visibleTabs;
+  let originalGroup = contentWindow.GroupItems.getActiveGroupItem();
+
+  // open a group with a tab, and close either the group or the tab.
+  function openAndClose(groupOrTab, callback) {
+    // let's create a group with a tab.
+    let group = new contentWindow.GroupItem([], {
+      immediately: true,
+      bounds: {left: 20, top: 20, width: 400, height: 400}
+    });
+    contentWindow.GroupItems.setActiveGroupItem(group);
+    win.gBrowser.loadOneTab('about:blank', {inBackground: true});
+  
+    is(group.getChildren().length, 1, "The group has one child now.");
+    let tab = group.getChild(0);
+  
+    function check() {
+      if (groupOrTab == 'group') {
+        group.removeSubscriber(group, "groupHidden", check);
+        group.closeHidden();
+      } else
+        tab.removeSubscriber(tab, "tabRemoved", check);
+  
+      is(contentWindow.GroupItems.getActiveGroupItem(), originalGroup,
+        "The original group is active.");
+      is(contentWindow.UI.getActiveTab(), originalTab._tabViewTabItem,
+        "The original tab is active");
+  
+      callback();
+    }
+  
+    if (groupOrTab == 'group') {
+      group.addSubscriber(group, "groupHidden", check);
+      group.closeAll();
+    } else {
+      tab.addSubscriber(tab, "tabRemoved", check);
+      tab.close();
+    }
+  }
+
+  // PHASE 1: create a group with a tab and close the group.
+  openAndClose("group", function postPhase1() {
+    // PHASE 2: create a group with a tab and close the tab.
+    openAndClose("tab", function postPhase2() {
+      win.close();
+      finish();
+    });
+  });
+}
\ No newline at end of file