diff --git a/lib/src/default_index/composite.rs b/lib/src/default_index/composite.rs
index 943a084c4d..67903921c6 100644
--- a/lib/src/default_index/composite.rs
+++ b/lib/src/default_index/composite.rs
@@ -91,12 +91,16 @@ impl<'a> CompositeIndex<'a> {
         CompositeIndex(segment)
     }
 
-    fn ancestor_files_without_local(&self) -> impl Iterator<Item = &'a Arc<ReadonlyIndexSegment>> {
+    /// Iterates parent and its ancestor readonly index segments.
+    pub(super) fn ancestor_files_without_local(
+        &self,
+    ) -> impl Iterator<Item = &'a Arc<ReadonlyIndexSegment>> {
         let parent_file = self.0.segment_parent_file();
         iter::successors(parent_file, |file| file.segment_parent_file())
     }
 
-    fn ancestor_index_segments(&self) -> impl Iterator<Item = &'a dyn IndexSegment> {
+    /// Iterates self and its ancestor index segments.
+    pub(super) fn ancestor_index_segments(&self) -> impl Iterator<Item = &'a dyn IndexSegment> {
         iter::once(self.0).chain(
             self.ancestor_files_without_local()
                 .map(|file| file.as_ref() as &dyn IndexSegment),
diff --git a/lib/src/default_index/mutable.rs b/lib/src/default_index/mutable.rs
index 3b45036f07..7260225ebd 100644
--- a/lib/src/default_index/mutable.rs
+++ b/lib/src/default_index/mutable.rs
@@ -240,33 +240,27 @@ impl MutableIndexSegment {
     fn maybe_squash_with_ancestors(self) -> MutableIndexSegment {
         let mut num_new_commits = self.segment_num_commits();
         let mut files_to_squash = vec![];
-        let mut maybe_parent_file = self.parent_file.clone();
-        let mut squashed;
-        loop {
-            match maybe_parent_file {
-                Some(parent_file) => {
-                    // TODO: We should probably also squash if the parent file has less than N
-                    // commits, regardless of how many (few) are in `self`.
-                    if 2 * num_new_commits < parent_file.segment_num_commits() {
-                        squashed = MutableIndexSegment::incremental(parent_file);
-                        break;
-                    }
-                    num_new_commits += parent_file.segment_num_commits();
-                    files_to_squash.push(parent_file.clone());
-                    maybe_parent_file = parent_file.segment_parent_file().cloned();
-                }
-                None => {
-                    squashed =
-                        MutableIndexSegment::full(self.commit_id_length, self.change_id_length);
-                    break;
-                }
+        let mut base_parent_file = None;
+        for parent_file in self.as_composite().ancestor_files_without_local() {
+            // TODO: We should probably also squash if the parent file has less than N
+            // commits, regardless of how many (few) are in `self`.
+            if 2 * num_new_commits < parent_file.segment_num_commits() {
+                base_parent_file = Some(parent_file.clone());
+                break;
             }
+            num_new_commits += parent_file.segment_num_commits();
+            files_to_squash.push(parent_file.clone());
         }
 
         if files_to_squash.is_empty() {
             return self;
         }
 
+        let mut squashed = if let Some(parent_file) = base_parent_file {
+            MutableIndexSegment::incremental(parent_file)
+        } else {
+            MutableIndexSegment::full(self.commit_id_length, self.change_id_length)
+        };
         for parent_file in files_to_squash.iter().rev() {
             squashed.add_commits_from(parent_file.as_ref());
         }
@@ -279,11 +273,10 @@ impl MutableIndexSegment {
             return Ok(self.parent_file.unwrap());
         }
 
-        let squashed = self.maybe_squash_with_ancestors();
         let mut buf = Vec::new();
-        squashed.serialize_parent_filename(&mut buf);
+        self.serialize_parent_filename(&mut buf);
         let local_entries_offset = buf.len();
-        squashed.serialize_local_entries(&mut buf);
+        self.serialize_local_entries(&mut buf);
         let mut hasher = Blake2b512::new();
         hasher.update(&buf);
         let index_file_id_hex = hex::encode(hasher.finalize());
@@ -297,9 +290,9 @@ impl MutableIndexSegment {
         Ok(ReadonlyIndexSegment::load_with_parent_file(
             &mut &buf[local_entries_offset..],
             index_file_id_hex,
-            squashed.parent_file,
-            squashed.commit_id_length,
-            squashed.change_id_length,
+            self.parent_file,
+            self.commit_id_length,
+            self.change_id_length,
         )
         .expect("in-memory index data should be valid and readable"))
     }
@@ -411,8 +404,8 @@ impl DefaultMutableIndex {
         self.0.add_commit_data(commit_id, change_id, parent_ids);
     }
 
-    pub(super) fn save_in(self, dir: &Path) -> io::Result<Arc<ReadonlyIndexSegment>> {
-        self.0.save_in(dir)
+    pub(super) fn squash_and_save_in(self, dir: &Path) -> io::Result<Arc<ReadonlyIndexSegment>> {
+        self.0.maybe_squash_with_ancestors().save_in(dir)
     }
 }
 
diff --git a/lib/src/default_index/store.rs b/lib/src/default_index/store.rs
index 4c59d709c5..0d188a2c12 100644
--- a/lib/src/default_index/store.rs
+++ b/lib/src/default_index/store.rs
@@ -194,7 +194,7 @@ impl DefaultIndexStore {
         op_id: &OperationId,
     ) -> Result<Arc<ReadonlyIndexSegment>, DefaultIndexStoreError> {
         let index_segment = mutable_index
-            .save_in(&self.dir)
+            .squash_and_save_in(&self.dir)
             .map_err(DefaultIndexStoreError::SaveIndex)?;
         self.associate_file_with_operation(&index_segment, op_id)
             .map_err(|source| DefaultIndexStoreError::AssociateIndex {