diff --git a/hgext3rd/fbamend/fold.py b/hgext3rd/fbamend/fold.py
--- a/hgext3rd/fbamend/fold.py
+++ b/hgext3rd/fbamend/fold.py
@@ -148,6 +148,9 @@
                 folded = repo.revs('allsuccessors(%ld)', revs).last()
                 common.restackonce(ui, repo, folded)
 
+            # volatile sets are invalid after fold
+            repo.invalidatevolatilesets()
+
             tr.close()
         finally:
             tr.release()
diff --git a/tests/test-fold-undo.t b/tests/test-fold-undo.t
new file mode 100644
--- /dev/null
+++ b/tests/test-fold-undo.t
@@ -0,0 +1,81 @@
+Set up test environment.
+This test confirms cacheinvalidation in hg fold.
+  $ cat >> $HGRCPATH << EOF
+  > [extensions]
+  > fbamend=$TESTDIR/../hgext3rd/fbamend
+  > inhibit=$TESTDIR/../hgext3rd/inhibit.py
+  > undo=$TESTDIR/../hgext3rd/undo.py
+  > rebase=
+  > [experimental]
+  > evolution = createmarkers, allowunstable
+  > EOF
+  $ showgraph() {
+  >   hg log --graph -T "{rev} {desc|firstline}" | sed \$d
+  > }
+  $ reset() {
+  >   cd ..
+  >   rm -rf repo
+  >   hg init repo
+  >   cd repo
+  > }
+
+Set up repo.
+  $ hg init repo && cd repo
+  $ hg debugbuilddag -m "+5 *4 +2"
+  $ showgraph
+  o  7 r7
+  |
+  o  6 r6
+  |
+  o  5 r5
+  |
+  | o  4 r4
+  | |
+  | o  3 r3
+  | |
+  | o  2 r2
+  |/
+  o  1 r1
+  |
+  o  0 r0
+  $ hg up 7
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+
+Do a fold
+  $ hg fold --exact 7 6
+  2 changesets folded
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  $ showgraph
+  @  8 r7
+  |
+  o  5 r5
+  |
+  | o  4 r4
+  | |
+  | o  3 r3
+  | |
+  | o  2 r2
+  |/
+  o  1 r1
+  |
+  o  0 r0
+
+Do an undo
+  $ hg undo
+  1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  $ showgraph
+  @  7 r7
+  |
+  o  6 r6
+  |
+  o  5 r5
+  |
+  | o  4 r4
+  | |
+  | o  3 r3
+  | |
+  | o  2 r2
+  |/
+  o  1 r1
+  |
+  o  0 r0