diff --git a/CHANGES.txt b/CHANGES.txt
index e2f3fd5..6184ce7 100644
--- a/CHANGES.txt
+++ b/CHANGES.txt
@@ -12,6 +12,10 @@ New Feature:
 
 Bugs fixed:
 
+- Option incrementing (+=) and decrementing (-=) did not work well with
+  macro sections (<=). Fixes
+  https://bugs.launchpad.net/zc.buildout/+bug/435837
+
 - While checking for new versions of setuptools and buildout itself,
   compare requirement locations instead of requirement objects.
 
diff --git a/src/zc/buildout/buildout.py b/src/zc/buildout/buildout.py
index 44766f2..eed040b 100644
--- a/src/zc/buildout/buildout.py
+++ b/src/zc/buildout/buildout.py
@@ -160,13 +160,12 @@ class Buildout(UserDict.DictMixin):
             base = None
 
 
-        cloptions = dict(
+        override = dict(
             (section, dict((option, (value, 'COMMAND_LINE_VALUE'))
                            for (_, option, value) in v))
             for (section, v) in itertools.groupby(sorted(cloptions),
                                                   lambda v: v[0])
             )
-        override = cloptions.get('buildout', {}).copy()
 
         # load user defaults, which override defaults
         if user_defaults:
@@ -181,9 +180,6 @@ class Buildout(UserDict.DictMixin):
             _update(data, _open(os.path.dirname(config_file), config_file, [],
                                 data['buildout'].copy(), override))
 
-        # apply command-line options
-        _update(data, cloptions)
-
         self._annotated = copy.deepcopy(data)
         self._raw = _unannotate(data)
         self._data = {}
@@ -1028,9 +1024,6 @@ class Options(UserDict.DictMixin):
         name = self.name
         __doing__ = 'Initializing section %s.', name
 
-        if '<' in self._raw:
-            self._raw = self._do_extend_raw(name, self._raw, [])
-
         # force substitutions
         for k, v in self._raw.items():
             if '${' in v:
@@ -1051,33 +1044,6 @@ class Options(UserDict.DictMixin):
         self.recipe = recipe_class(buildout, name, self)
         buildout._parts.append(name)
 
-    def _do_extend_raw(self, name, data, doing):
-        if name == 'buildout':
-            return data
-        if name in doing:
-            raise zc.buildout.UserError("Infinite extending loop %r" % name)
-        doing.append(name)
-        try:
-            to_do = data.pop('<', None)
-            if to_do is None:
-                return data
-            __doing__ = 'Loading input sections for %r', name
-
-            result = {}
-            for iname in to_do.split('\n'):
-                iname = iname.strip()
-                if not iname:
-                    continue
-                raw = self.buildout._raw.get(iname)
-                if raw is None:
-                    raise zc.buildout.UserError("No section named %r" % iname)
-                result.update(self._do_extend_raw(iname, raw, doing))
-
-            result.update(data)
-            return result
-        finally:
-            assert doing.pop() == name
-
     def _dosub(self, option, v):
         __doing__ = 'Getting option %s:%s.', self.name, option
         seen = [(self.name, option)]
@@ -1273,7 +1239,7 @@ def _open(base, filename, seen, dl_options, override):
 
     Recursively open other files based on buildout options found.
     """
-    _update_section(dl_options, override)
+    _update_section(dl_options, override.get('buildout', {}))
     _dl_options = _unannotate_section(dl_options.copy())
     is_temp = False
     download = zc.buildout.download.Download(
@@ -1330,10 +1296,15 @@ def _open(base, filename, seen, dl_options, override):
 
     if extends:
         extends = extends.split()
-        eresult = _open(base, extends.pop(0), seen, dl_options, override)
+        eresult = _expand_macros(result, _open(base, extends.pop(0), seen, dl_options, override), override)
+
         for fname in extends:
-            _update(eresult, _open(base, fname, seen, dl_options, override))
-        result = _update(eresult, result)
+            _update(eresult, _expand_macros(eresult, _open(base, fname, seen, dl_options, override), override))
+
+        result = _update(eresult, _expand_macros(eresult, result, override))
+    else:
+        # Macro expand the only section.
+        result = _expand_macros(result, result, override)
 
     if extended_by:
         self._logger.warn(
@@ -1346,6 +1317,63 @@ def _open(base, filename, seen, dl_options, override):
     seen.pop()
     return result
 
+def _expand_macros(expansion_base, config, overrides=None):
+    """Expands macros found in ``config`` by looking up the macro definitions
+    in ``expansion_base`` (which represents the overall buildout configuration
+    parsed so far).
+    
+    If ``overrides`` is given then both the ``expansion_base`` and ``config``
+    are updated with it to override existing values before the expansion takes
+    place.
+    
+    Returns a new dictionary based on ``config`` with macros expanded.
+    """
+    expanded = config.copy()
+    if overrides is not None:
+         for section in overrides:
+            expanded.setdefault(section, {}).update(overrides[section])
+            # Note that we modify the expansion_place here and let the changes
+            # propagate.
+            expansion_base.setdefault(section, {}).update(overrides[section])
+
+    for section in config:
+        expanded[section] = _expand_section(section, expansion_base, expanded, [])
+
+    return expanded
+
+def _expand_section(name, expansion_base, config, expanded):
+    """Expands macros in ``config[name]`` section using macro definitions from
+    ``expansion_base``.
+    """
+    if name in expanded:
+        raise zc.buildout.UserError('Infinite section expansion loop %r' % name)
+
+    macro_names, note = config[name].get('<', (None, None))
+    expanded.append(name)
+
+    if macro_names is None:
+        # No macros in use
+        return config[name]
+
+    expanded_section = {}
+    for macro in macro_names.splitlines():
+        macro = macro.strip()
+        if not macro:
+            continue
+
+        # Expand recursively
+        if macro in config:
+            expanded_section.update(_expand_section(macro, expansion_base, config, expanded))
+        elif macro in expansion_base:
+            expanded_section.update(_expand_section(macro, expansion_base, expansion_base, expanded))
+        else:
+            raise zc.buildout.UserError('No section named %r available for section extension.' % macro)
+
+    # Override any values we got from the macros with the section specific ones.
+    expanded_section.update(config[name])
+    # Remove the macro option from the current section.
+    expanded_section.pop('<', None)
+    return expanded_section
 
 ignore_directories = '.svn', 'CVS'
 def _dir_hash(dir):
@@ -1372,35 +1400,50 @@ def _dists_sig(dists):
             result.append(os.path.basename(location))
     return result
 
-def _update_section(s1, s2):
-    s2 = s2.copy() # avoid mutating the second argument, which is unexpected
-    for k, v in s2.items():
+def _expand_modifiers(source, section):
+    """Expands the +=/-= modifies used in ``section`` by looking up
+    in ``source`` in addition to ``section``.
+
+    Returns a new dictionary containing the information from ``section``
+    with modifiers expanded.
+    """
+    expanded = {}
+    # We look up the reference sections for +/- operations in both the section
+    # itself and the additional source section.
+    lookup = source.copy()
+    lookup.update(section)
+
+    for k, v in section.items():
         v2, note2 = v
         if k.endswith('+'):
             key = k.rstrip(' +')
-            v1, note1 = s1.get(key, ("", ""))
+            v1, note1 = lookup.get(key, ("", ""))
             newnote = ' [+] '.join((note1, note2)).strip()
-            s2[key] = "\n".join((v1).split('\n') +
-                v2.split('\n')), newnote
-            del s2[k]
+            expanded[key] = "\n".join((v1).split('\n') + v2.split('\n')), newnote
+            lookup.update(expanded)
         elif k.endswith('-'):
             key = k.rstrip(' -')
-            v1, note1 = s1.get(key, ("", ""))
+            v1, note1 = lookup.get(key, ("", ""))
             newnote = ' [-] '.join((note1, note2)).strip()
-            s2[key] = ("\n".join(
-                [v for v in v1.split('\n')
-                   if v not in v2.split('\n')]), newnote)
-            del s2[k]
+            expanded[key] = ("\n".join(
+                [v for v in v1.split('\n') if v not in v2.split('\n')]), newnote)
+            lookup.update(expanded)
+        else:
+            expanded[k] = v
+
+    return expanded
 
-    s1.update(s2)
+def _update_section(s1, s2):
+    s1.update(_expand_modifiers(s1, s2))
     return s1
 
 def _update(d1, d2):
     for section in d2:
         if section in d1:
-            d1[section] = _update_section(d1[section], d2[section])
+            d1[section].update(_expand_modifiers(d1[section], d2[section]))
         else:
-            d1[section] = d2[section]
+            d1[section] = _expand_modifiers(d2[section], d2[section])
+
     return d1
 
 def _recipe(options):
diff --git a/src/zc/buildout/tests.py b/src/zc/buildout/tests.py
index 94fc970..0b7b073 100644
--- a/src/zc/buildout/tests.py
+++ b/src/zc/buildout/tests.py
@@ -2653,6 +2653,155 @@ def increment_on_command_line():
       recipe='zc.buildout:debug'
     """
 
+def bug_435837_macro_expansion_with_option_increments_and_extended_config():
+    r"""
+    >>> write(sample_buildout, 'base.cfg',
+    ... '''
+    ... [buildout]
+    ... parts = mypart
+    ... log-level = INFO
+    ...
+    ... [macro]
+    ... recipe = zc.buildout:debug
+    ... foo =
+    ...     original_value_1
+    ...     original_value_2
+    ...     original_value_3
+    ...
+    ... [mypart]
+    ... <= macro
+    ... ''')
+
+    >>> write(sample_buildout, 'buildout.cfg',
+    ... '''
+    ... [buildout]
+    ... extends = base.cfg
+    ...
+    ... [mypart]
+    ... foo +=
+    ...     extended_option_1
+    ...     extended_option_2
+    ... foo -=
+    ...     original_value_1
+    ... ''')
+
+    >>> print system(buildout),
+    Installing mypart.
+      foo='original_value_2\noriginal_value_3\n\nextended_option_1\nextended_option_2'
+      recipe='zc.buildout:debug'
+    """
+
+def bug_435837_recursive_macro_expansion():
+    r"""
+    >>> write(sample_buildout, 'buildout.cfg',
+    ... '''
+    ... [buildout]
+    ... parts =
+    ...     mypart1
+    ...     mypart2
+    ... log-level = INFO
+    ...
+    ... [macro]
+    ... recipe = zc.buildout:debug
+    ... foo = foo_value
+    ...
+    ... [mypart1]
+    ... <= macro
+    ... bar = bar_value
+    ...
+    ... [mypart2]
+    ... <= mypart1
+    ... foo = custom_value
+    ... ''')
+    
+    >>> print system(buildout)
+    Installing mypart1.
+      bar='bar_value'
+      foo='foo_value'
+      recipe='zc.buildout:debug'
+    Installing mypart2.
+      bar='bar_value'
+      foo='custom_value'
+      recipe='zc.buildout:debug'
+    <BLANKLINE>
+    """
+
+def bug_435837_recursive_macro_expansion__fails_with_dash_in_section_name():
+    r"""
+    The use of dashes in the section named revealed an ordering related bug
+    when iterating over a section keys resulting in the following error
+    message.
+
+      Error: missing option: project-one:recipe
+    
+    >>> write(sample_buildout, 'buildout.cfg',
+    ... '''
+    ... [buildout]
+    ... parts =
+    ...     project-one
+    ...     project-two
+    ... log-level = INFO
+    ...
+    ... [project]
+    ... recipe = zc.buildout:debug
+    ...
+    ... [project-one]
+    ... <= project
+    ...
+    ... [project-two]
+    ... <= project-one
+    ... ''')
+    
+    >>> print system(buildout)
+    Installing project-one.
+      recipe='zc.buildout:debug'
+    Installing project-two.
+      recipe='zc.buildout:debug'
+    <BLANKLINE>
+    """
+
+def bug_435837_recursive_macro_expansion_with_multiple_base_macros(self):
+    r"""
+    >>> write(sample_buildout, 'buildout.cfg',
+    ... '''
+    ... [buildout]
+    ... parts =
+    ...     project-one
+    ...     project-two
+    ... log-level = INFO
+    ...
+    ... [macro1]
+    ... recipe = zc.buildout:debug
+    ... foo = one
+    ...
+    ... [macro2]
+    ... recipe = zc.buildout:debug
+    ... foo = two
+    ... bar = three
+    ...
+    ... [project-one]
+    ... <=
+    ...    macro1
+    ...    macro2
+    ...
+    ... [project-two]
+    ... <=
+    ...    macro2
+    ...    macro1
+    ... ''')
+    
+    >>> print system(buildout)
+    Installing project-one.
+      bar='three'
+      foo='two'
+      recipe='zc.buildout:debug'
+    Installing project-two.
+      bar='three'
+      foo='one'
+      recipe='zc.buildout:debug'
+    <BLANKLINE>
+    """
+
 ######################################################################
 
 def create_sample_eggs(test, executable=sys.executable):