diff --git a/app/models/concerns/mentionable.rb b/app/models/concerns/mentionable.rb
index 694403949c1..5f53ea25630 100644
--- a/app/models/concerns/mentionable.rb
+++ b/app/models/concerns/mentionable.rb
@@ -66,8 +66,8 @@ module Mentionable
   end
 
   # Create a cross-reference Note for each GFM reference to another Mentionable found in +mentionable_text+.
-  def create_cross_references!(author = self.author, without = [])
-    refs = referenced_mentionables(author)
+  def create_cross_references!(author = self.author, without = [], text = self.mentionable_text)
+    refs = referenced_mentionables(author, text)
     
     # We're using this method instead of Array diffing because that requires
     # both of the object's `hash` values to be the same, which may not be the
diff --git a/app/models/note.rb b/app/models/note.rb
index 13eb28f5718..ee0c14598f3 100644
--- a/app/models/note.rb
+++ b/app/models/note.rb
@@ -62,7 +62,6 @@ class Note < ActiveRecord::Base
 
   serialize :st_diff
   before_create :set_diff, if: ->(n) { n.line_code.present? }
-  after_update :set_references
 
   class << self
     def discussions_from_notes(notes)
@@ -333,15 +332,13 @@ class Note < ActiveRecord::Base
   end
 
   def noteable_type_name
-    if noteable_type.present?
-      noteable_type.downcase
-    end
+    noteable_type.downcase if noteable_type.present?
   end
 
   # FIXME: Hack for polymorphic associations with STI
   #        For more information visit http://api.rubyonrails.org/classes/ActiveRecord/Associations/ClassMethods.html#label-Polymorphic+Associations
-  def noteable_type=(sType)
-    super(sType.to_s.classify.constantize.base_class.to_s)
+  def noteable_type=(noteable_type)
+    super(noteable_type.to_s.classify.constantize.base_class.to_s)
   end
 
   # Reset notes events cache
@@ -357,10 +354,6 @@ class Note < ActiveRecord::Base
     Event.reset_event_cache_for(self)
   end
 
-  def set_references
-    create_new_cross_references!
-  end
-
   def system?
     read_attribute(:system)
   end
diff --git a/app/services/notes/create_service.rb b/app/services/notes/create_service.rb
index 482c0444049..2001dc89c33 100644
--- a/app/services/notes/create_service.rb
+++ b/app/services/notes/create_service.rb
@@ -11,13 +11,7 @@ module Notes
         # Skip system notes, like status changes and cross-references.
         unless note.system
           event_service.leave_note(note, note.author)
-
-          # Create a cross-reference note if this Note contains GFM that names an
-          # issue, merge request, or commit.
-          note.references.each do |mentioned|
-            SystemNoteService.cross_reference(mentioned, note.noteable, note.author)
-          end
-
+          note.create_cross_references!
           execute_hooks(note)
         end
       end
diff --git a/app/services/notes/update_service.rb b/app/services/notes/update_service.rb
index c22a9333ef6..6c2f08e5963 100644
--- a/app/services/notes/update_service.rb
+++ b/app/services/notes/update_service.rb
@@ -4,7 +4,7 @@ module Notes
       return note unless note.editable?
 
       note.update_attributes(params.merge(updated_by: current_user))
-
+      note.create_new_cross_references!
       note.reset_events_cache
 
       note