diff --git a/dlls/hlink/hlink_main.c b/dlls/hlink/hlink_main.c
index 0e2ce905186..f6c41848c53 100644
--- a/dlls/hlink/hlink_main.c
+++ b/dlls/hlink/hlink_main.c
@@ -77,14 +77,12 @@ HRESULT WINAPI HlinkCreateFromMoniker( IMoniker *pimkTrgt, LPCWSTR pwzLocation,
     if (FAILED(r))
         return r;
 
-    if (pwzLocation)
-        IHlink_SetStringReference(hl, HLINKSETF_LOCATION, NULL, pwzLocation);
+    IHlink_SetMonikerReference(hl, HLINKSETF_LOCATION | HLINKSETF_TARGET, pimkTrgt, pwzLocation);
+
     if (pwzFriendlyName)
         IHlink_SetFriendlyName(hl, pwzFriendlyName);
     if (pihlsite)
         IHlink_SetHlinkSite(hl, pihlsite, dwSiteData);
-    if (pimkTrgt)
-        IHlink_SetMonikerReference(hl, HLINKSETF_LOCATION | HLINKSETF_TARGET, pimkTrgt, pwzLocation);
 
     *ppvObj = hl;
 
@@ -111,43 +109,12 @@ HRESULT WINAPI HlinkCreateFromString( LPCWSTR pwzTarget, LPCWSTR pwzLocation,
     if (FAILED(r))
         return r;
 
-    if (pwzLocation)
-        IHlink_SetStringReference(hl, HLINKSETF_LOCATION, NULL, pwzLocation);
-
-    if (pwzTarget)
-    {
-        IMoniker *pTgtMk = NULL;
-        IBindCtx *pbc = NULL;
-        ULONG eaten;
-
-        CreateBindCtx(0, &pbc);
-        r = MkParseDisplayName(pbc, pwzTarget, &eaten, &pTgtMk);
-        IBindCtx_Release(pbc);
-
-        if (FAILED(r))
-        {
-            LPCWSTR p = strchrW(pwzTarget, ':');
-            if (p && (p - pwzTarget > 1))
-                r = CreateURLMoniker(NULL, pwzTarget, &pTgtMk);
-            else
-                r = CreateFileMoniker(pwzTarget,&pTgtMk);
-        }
-
-        if (FAILED(r))
-        {
-            ERR("couldn't create moniker for %s, failed with error 0x%08x\n",
-                debugstr_w(pwzTarget), r);
-            return r;
-        }
-
-        IHlink_SetMonikerReference(hl, HLINKSETF_TARGET | HLINKSETF_LOCATION, pTgtMk, pwzLocation);
-        IMoniker_Release(pTgtMk);
-
-        IHlink_SetStringReference(hl, HLINKSETF_TARGET, pwzTarget, NULL);
-    }
+    IHlink_SetStringReference(hl, HLINKSETF_TARGET | HLINKSETF_LOCATION,
+            pwzTarget, pwzLocation);
 
     if (pwzFriendlyName)
         IHlink_SetFriendlyName(hl, pwzFriendlyName);
+
     if (pihlsite)
         IHlink_SetHlinkSite(hl, pihlsite, dwSiteData);
 
diff --git a/dlls/hlink/link.c b/dlls/hlink/link.c
index 78b6c1eba8c..52197ccf6fd 100644
--- a/dlls/hlink/link.c
+++ b/dlls/hlink/link.c
@@ -51,7 +51,6 @@ typedef struct
 
     LPWSTR              FriendlyName;
     LPWSTR              Location;
-    LPWSTR              Target;
     LPWSTR              TargetFrameName;
     IMoniker            *Moniker;
     IHlinkSite          *Site;
@@ -155,7 +154,6 @@ static ULONG WINAPI IHlink_fnRelease (IHlink* iface)
 
     TRACE("-- destroying IHlink (%p)\n", This);
     heap_free(This->FriendlyName);
-    heap_free(This->Target);
     heap_free(This->TargetFrameName);
     heap_free(This->Location);
     if (This->Moniker)
@@ -251,9 +249,45 @@ static HRESULT WINAPI IHlink_fnSetStringReference(IHlink* iface,
 
     if (grfHLSETF & HLINKSETF_TARGET)
     {
-        heap_free(This->Target);
-        This->Target = hlink_strdupW( pwzTarget );
+        if (This->Moniker)
+        {
+            IMoniker_Release(This->Moniker);
+            This->Moniker = NULL;
+        }
+        if (pwzTarget && *pwzTarget)
+        {
+            IMoniker *pMon;
+            IBindCtx *pbc = NULL;
+            ULONG eaten;
+            HRESULT r;
+
+            r = CreateBindCtx(0, &pbc);
+            if (FAILED(r))
+                return E_OUTOFMEMORY;
+
+            r = MkParseDisplayName(pbc, pwzTarget, &eaten, &pMon);
+            IBindCtx_Release(pbc);
+
+            if (FAILED(r))
+            {
+                LPCWSTR p = strchrW(pwzTarget, ':');
+                if (p && (p - pwzTarget > 1))
+                    r = CreateURLMoniker(NULL, pwzTarget, &pMon);
+                else
+                    r = CreateFileMoniker(pwzTarget, &pMon);
+                if (FAILED(r))
+                {
+                    ERR("couldn't create moniker for %s, failed with error 0x%08x\n",
+                        debugstr_w(pwzTarget), r);
+                    return r;
+                }
+            }
+
+            IHlink_SetMonikerReference(iface, HLINKSETF_TARGET, pMon, NULL);
+            IMoniker_Release(pMon);
+        }
     }
+
     if (grfHLSETF & HLINKSETF_LOCATION)
     {
         heap_free(This->Location);
@@ -302,22 +336,19 @@ static HRESULT WINAPI IHlink_fnGetStringReference (IHlink* iface,
 
     if (ppwzTarget)
     {
-        *ppwzTarget = hlink_co_strdupW( This->Target );
-
-        if (!This->Target)
+        IMoniker* mon;
+        __GetMoniker(This, &mon);
+        if (mon)
         {
-            IMoniker* mon;
-            __GetMoniker(This, &mon);
-            if (mon)
-            {
-                IBindCtx *pbc;
+            IBindCtx *pbc;
 
-                CreateBindCtx( 0, &pbc);
-                IMoniker_GetDisplayName(mon, pbc, NULL, ppwzTarget);
-                IBindCtx_Release(pbc);
-                IMoniker_Release(mon);
-            }
+            CreateBindCtx( 0, &pbc);
+            IMoniker_GetDisplayName(mon, pbc, NULL, ppwzTarget);
+            IBindCtx_Release(pbc);
+            IMoniker_Release(mon);
         }
+        else
+            *ppwzTarget = NULL;
     }
     if (ppwzLocation)
         *ppwzLocation = hlink_co_strdupW( This->Location );
diff --git a/dlls/hlink/tests/hlink.c b/dlls/hlink/tests/hlink.c
index 6999187a39a..6a67f597e79 100644
--- a/dlls/hlink/tests/hlink.c
+++ b/dlls/hlink/tests/hlink.c
@@ -137,9 +137,7 @@ static void test_reference(void)
 
     r = IHlink_GetStringReference(lnk, HLINKGETREF_DEFAULT, &str, NULL);
     ok(r == S_OK, "failed\n");
-    todo_wine {
     ok(!lstrcmpW(str, url2), "url wrong\n");
-    }
     CoTaskMemFree(str);
 
     r = IHlink_GetStringReference(lnk, HLINKGETREF_DEFAULT, NULL, NULL);
@@ -1215,6 +1213,117 @@ static void test_HlinkGetSetStringReference(void)
     IHlink_Release(link);
 }
 
+#define setStringRef(h,f,t,l) r_setStringRef(__LINE__,h,f,t,l)
+static void r_setStringRef(unsigned line, IHlink *hlink, DWORD flags, const WCHAR *tgt, const WCHAR *loc)
+{
+    HRESULT hres;
+    hres = IHlink_SetStringReference(hlink, flags, tgt, loc);
+    ok_(__FILE__,line) (hres == S_OK, "IHlink_SetStringReference failed: 0x%08x\n", hres);
+}
+
+#define getStringRef(h,t,l) r_getStringRef(__LINE__,h,t,l)
+static void r_getStringRef(unsigned line, IHlink *hlink, const WCHAR *exp_tgt, const WCHAR *exp_loc)
+{
+    HRESULT hres;
+    WCHAR *fnd_tgt, *fnd_loc;
+
+    hres = IHlink_GetStringReference(hlink, HLINKGETREF_DEFAULT, &fnd_tgt, &fnd_loc);
+    ok_(__FILE__,line) (hres == S_OK, "IHlink_GetStringReference failed: 0x%08x\n", hres);
+
+    if(exp_tgt)
+        ok_(__FILE__,line) (!lstrcmpW(fnd_tgt, exp_tgt), "Found string target should have been %s, was: %s\n", wine_dbgstr_w(exp_tgt), wine_dbgstr_w(fnd_tgt));
+    else
+        ok_(__FILE__,line) (exp_tgt == NULL, "Found string target should have been NULL, was: %s\n", wine_dbgstr_w(fnd_tgt));
+
+    if(exp_loc)
+        ok_(__FILE__,line) (!lstrcmpW(fnd_loc, exp_loc), "Found string location should have been %s, was: %s\n", wine_dbgstr_w(exp_loc), wine_dbgstr_w(fnd_loc));
+    else
+        ok_(__FILE__,line) (exp_loc == NULL, "Found string location should have been NULL, was: %s\n", wine_dbgstr_w(fnd_loc));
+
+    CoTaskMemFree(fnd_tgt);
+    CoTaskMemFree(fnd_loc);
+}
+
+#define setMonikerRef(h,f,t,l) r_setMonikerRef(__LINE__,h,f,t,l)
+static void r_setMonikerRef(unsigned line, IHlink *hlink, DWORD flags, IMoniker *tgt, const WCHAR *loc)
+{
+    HRESULT hres;
+    hres = IHlink_SetMonikerReference(hlink, flags, tgt, loc);
+    ok_(__FILE__,line) (hres == S_OK, "IHlink_SetMonikerReference failed: 0x%08x\n", hres);
+}
+
+/* passing 0xFFFFFFFF as exp_tgt will return the retrieved target & not test it */
+#define getMonikerRef(h,t,l) r_getMonikerRef(__LINE__,h,t,l)
+static IMoniker *r_getMonikerRef(unsigned line, IHlink *hlink, IMoniker *exp_tgt, const WCHAR *exp_loc)
+{
+    HRESULT hres;
+    IMoniker *fnd_tgt;
+    WCHAR *fnd_loc;
+
+    hres = IHlink_GetMonikerReference(hlink, HLINKGETREF_DEFAULT, &fnd_tgt, &fnd_loc);
+    ok_(__FILE__,line) (hres == S_OK, "IHlink_GetMonikerReference failed: 0x%08x\n", hres);
+
+    if(exp_loc)
+        ok_(__FILE__,line) (!lstrcmpW(fnd_loc, exp_loc), "Found string location should have been %s, was: %s\n", wine_dbgstr_w(exp_loc), wine_dbgstr_w(fnd_loc));
+    else
+        ok_(__FILE__,line) (exp_loc == NULL, "Found string location should have been NULL, was: %s\n", wine_dbgstr_w(fnd_loc));
+
+    CoTaskMemFree(fnd_loc);
+
+    if(exp_tgt == (IMoniker*)0xFFFFFFFF)
+        return fnd_tgt;
+
+    ok_(__FILE__,line) (fnd_tgt == exp_tgt, "Found moniker target should have been %p, was: %p\n", exp_tgt, fnd_tgt);
+
+    if(fnd_tgt)
+        IMoniker_Release(fnd_tgt);
+
+    return NULL;
+}
+
+static void test_HlinkMoniker(void)
+{
+    IHlink *hlink;
+    IMoniker *aMon, *file_mon;
+    static const WCHAR emptyW[] = {0};
+    static const WCHAR wordsW[] = {'w','o','r','d','s',0};
+    static const WCHAR aW[] = {'a',0};
+    static const WCHAR bW[] = {'b',0};
+    HRESULT hres;
+
+    hres = HlinkCreateFromString(NULL, NULL, NULL, NULL, 0, NULL, &IID_IHlink, (void**)&hlink);
+    ok(hres == S_OK, "HlinkCreateFromString failed: 0x%08x\n", hres);
+    getStringRef(hlink, NULL, NULL);
+    getMonikerRef(hlink, NULL, NULL);
+
+    /* setting a string target creates a moniker reference */
+    setStringRef(hlink, HLINKSETF_TARGET | HLINKSETF_LOCATION, aW, wordsW);
+    getStringRef(hlink, aW, wordsW);
+    aMon = getMonikerRef(hlink, (IMoniker*)0xFFFFFFFF, wordsW);
+    ok(aMon != NULL, "Moniker from %s target should not be NULL\n", wine_dbgstr_w(aW));
+    if(aMon)
+        IMoniker_Release(aMon);
+
+    /* setting target & location to the empty string deletes the moniker
+     * reference */
+    setStringRef(hlink, HLINKSETF_TARGET | HLINKSETF_LOCATION, emptyW, emptyW);
+    getStringRef(hlink, NULL, NULL);
+    getMonikerRef(hlink, NULL, NULL);
+
+    /* setting a moniker target also sets the target string to that moniker's
+     * display name */
+    hres = CreateFileMoniker(bW, &file_mon);
+    ok(hres == S_OK, "CreateFileMoniker failed: 0x%08x\n", hres);
+
+    setMonikerRef(hlink, HLINKSETF_TARGET | HLINKSETF_LOCATION, file_mon, wordsW);
+    getStringRef(hlink, bW, wordsW);
+    getMonikerRef(hlink, file_mon, wordsW);
+
+    IMoniker_Release(file_mon);
+
+    IHlink_Release(hlink);
+}
+
 START_TEST(hlink)
 {
     CoInitialize(NULL);
@@ -1228,6 +1337,7 @@ START_TEST(hlink)
     test_HlinkResolveMonikerForData();
     test_HlinkGetSetMonikerReference();
     test_HlinkGetSetStringReference();
+    test_HlinkMoniker();
 
     CoUninitialize();
 }