diff --git a/lib/factory_girl/factory.rb b/lib/factory_girl/factory.rb
index c679fa7..babfd50 100644
--- a/lib/factory_girl/factory.rb
+++ b/lib/factory_girl/factory.rb
@@ -58,15 +58,6 @@ module FactoryGirl
       @attribute_list.overridable?
     end
 
-    def inherit_factory(parent) #:nodoc:
-      @class_name       ||= parent.class_name
-      @default_strategy ||= parent.default_strategy
-      @parent_factory   = parent
-
-      allow_overrides if parent.allow_overrides?
-      parent.add_child(self)
-    end
-
     def add_child(factory)
       @children << factory unless @children.include?(factory)
     end
@@ -92,6 +83,7 @@ module FactoryGirl
     end
 
     def run(proxy_class, overrides) #:nodoc:
+      ensure_compiled
       proxy = proxy_class.new(build_class)
       callbacks.each { |callback| proxy.add_callback(callback) }
       overrides = overrides.symbolize_keys
@@ -164,13 +156,14 @@ module FactoryGirl
     end
 
     def compile
+      inherit_factory(FactoryGirl.factory_by_name(@parent)) if @parent
+
       declarations.each do |declaration|
         declaration.to_attributes.each do |attribute|
           define_attribute(attribute)
         end
       end
 
-      update_children if allow_overrides?
       @compiled = true
     end
 
@@ -178,16 +171,26 @@ module FactoryGirl
       @attribute_list.declare_attribute(declaration)
     end
 
+    def ensure_compiled
+      compile unless @compiled
+    end
+
+    def inherit_factory(parent) #:nodoc:
+      parent.ensure_compiled
+      @class_name       ||= parent.class_name
+      @default_strategy ||= parent.default_strategy
+      @parent_factory   = parent
+
+      allow_overrides if parent.allow_overrides?
+      parent.add_child(self)
+    end
+
     private
 
     def declarations
       @attribute_list.declarations
     end
 
-    def update_children
-      @children.each { |child| child.inherit_factory(self) }
-    end
-
     def define_attribute(attribute)
       if attribute.respond_to?(:factory) && attribute.factory == self.name
         raise AssociationDefinitionError, "Self-referencing association '#{attribute.name}' in factory '#{self.name}'"
@@ -215,9 +218,5 @@ module FactoryGirl
     def trait_for(name)
       @defined_traits.detect {|trait| trait.name == name }
     end
-
-    def ensure_compiled
-      compile unless @compiled
-    end
   end
 end
diff --git a/lib/factory_girl/syntax/default.rb b/lib/factory_girl/syntax/default.rb
index b7277fe..adde931 100644
--- a/lib/factory_girl/syntax/default.rb
+++ b/lib/factory_girl/syntax/default.rb
@@ -21,10 +21,6 @@ module FactoryGirl
           proxy = FactoryGirl::DefinitionProxy.new(factory)
           proxy.instance_eval(&block) if block_given?
 
-          if parent = options.delete(:parent)
-            factory.inherit_factory(FactoryGirl.factory_by_name(parent))
-          end
-
           FactoryGirl.register_factory(factory)
 
           proxy.child_factories.each do |(child_name, child_options, child_block)|
diff --git a/lib/factory_girl/syntax/vintage.rb b/lib/factory_girl/syntax/vintage.rb
index 78a0630..8b14848 100644
--- a/lib/factory_girl/syntax/vintage.rb
+++ b/lib/factory_girl/syntax/vintage.rb
@@ -28,9 +28,6 @@ module FactoryGirl
           factory = FactoryGirl::Factory.new(name, options)
           proxy = FactoryGirl::DefinitionProxy.new(factory)
           yield(proxy)
-          if parent = options.delete(:parent)
-            factory.inherit_factory(FactoryGirl.factory_by_name(parent))
-          end
           FactoryGirl.register_factory(factory)
         end
 
diff --git a/spec/acceptance/define_child_before_parent_spec.rb b/spec/acceptance/define_child_before_parent_spec.rb
new file mode 100644
index 0000000..fe1d67f
--- /dev/null
+++ b/spec/acceptance/define_child_before_parent_spec.rb
@@ -0,0 +1,21 @@
+require "spec_helper"
+
+describe "defining a child factory before a parent" do
+  before do
+    define_model("User", :name => :string, :admin => :boolean, :email => :string, :upper_email => :string, :login => :string)
+
+    FactoryGirl.define do
+      factory :admin, :parent => :user do
+        admin true
+      end
+
+      factory :user do
+        name "awesome"
+      end
+    end
+  end
+
+  it "creates admin factories correctly" do
+    FactoryGirl.create(:admin).should be_admin
+  end
+end
diff --git a/spec/acceptance/syntax/vintage_spec.rb b/spec/acceptance/syntax/vintage_spec.rb
index 47e420d..f2da597 100644
--- a/spec/acceptance/syntax/vintage_spec.rb
+++ b/spec/acceptance/syntax/vintage_spec.rb
@@ -50,6 +50,7 @@ describe Factory, "referencing a nonexistent factory as a parent" do
   it "should raise an ArgumentError when trying to use a non-existent factory as parent" do
     lambda {
       Factory.define(:child, :parent => :nonexsitent) {}
+      Factory.build(:child)
     }.should raise_error(ArgumentError)
   end
 end