diff --git a/packages/flutter/lib/src/painting/box_painter.dart b/packages/flutter/lib/src/painting/box_painter.dart
index 394beef51b7..9d9b413106c 100644
--- a/packages/flutter/lib/src/painting/box_painter.dart
+++ b/packages/flutter/lib/src/painting/box_painter.dart
@@ -1051,7 +1051,7 @@ class BoxDecoration extends Decoration {
   /// * If [backgroundColor] is null, this decoration does not paint a background color.
   /// * If [backgroundImage] is null, this decoration does not paint a background image.
   /// * If [border] is null, this decoration does not paint a border.
-  /// * If [borderRadius] is null, this decoration use more efficient background
+  /// * If [borderRadius] is null, this decoration uses more efficient background
   ///   painting commands. The [borderRadius] argument must be be null if [shape] is
   ///   [BoxShape.circle].
   /// * If [boxShadow] is null, this decoration does not paint a shadow.
@@ -1079,7 +1079,8 @@ class BoxDecoration extends Decoration {
   /// potentially with a border radius, or a circle).
   final Color backgroundColor;
 
-  /// An image to paint above the background color.
+  /// An image to paint above the background color. If [shape] is [BoxShape.circle]
+  /// then the image is clipped to the circle's boundary.
   final BackgroundImage backgroundImage;
 
   /// A border to draw above the background.
@@ -1333,6 +1334,17 @@ class _BoxDecorationPainter extends BoxPainter {
     final ui.Image image = _image?.image;
     if (image == null)
       return;
+
+    Path clipPath;
+    if (_decoration.shape == BoxShape.circle)
+      clipPath = new Path()..addOval(rect);
+    else if (_decoration.borderRadius != null)
+      clipPath = new Path()..addRRect(_decoration.borderRadius.toRRect(rect));
+    if (clipPath != null) {
+      canvas.save();
+      canvas.clipPath(clipPath);
+    }
+
     paintImage(
       canvas: canvas,
       rect: rect,
@@ -1342,6 +1354,9 @@ class _BoxDecorationPainter extends BoxPainter {
       fit: backgroundImage.fit,
       repeat: backgroundImage.repeat
     );
+
+    if (clipPath != null)
+      canvas.restore();
   }
 
   void _imageListener(ImageInfo value, bool synchronousCall) {
diff --git a/packages/flutter/test/painting/decoration_test.dart b/packages/flutter/test/painting/decoration_test.dart
index 356541b17ac..98400cadbad 100644
--- a/packages/flutter/test/painting/decoration_test.dart
+++ b/packages/flutter/test/painting/decoration_test.dart
@@ -3,6 +3,7 @@
 // found in the LICENSE file.
 
 import 'dart:async';
+import 'dart:ui' as ui show Image;
 
 import 'package:flutter/foundation.dart';
 import 'package:flutter/painting.dart';
@@ -13,8 +14,14 @@ import 'package:test/test.dart';
 import '../services/mocks_for_image_cache.dart';
 
 class TestCanvas implements Canvas {
+  TestCanvas([this.invocations]);
+
+  final List<Invocation> invocations;
+
   @override
-  void noSuchMethod(Invocation invocation) {}
+  void noSuchMethod(Invocation invocation) {
+    invocations?.add(invocation);
+  }
 }
 
 class SynchronousTestImageProvider extends ImageProvider<int> {
@@ -45,6 +52,43 @@ class AsyncTestImageProvider extends ImageProvider<int> {
   }
 }
 
+class BackgroundImageProvider extends ImageProvider<BackgroundImageProvider> {
+  final Completer<ImageInfo> _completer = new Completer<ImageInfo>();
+
+  @override
+  Future<BackgroundImageProvider> obtainKey(ImageConfiguration configuration) {
+    return new SynchronousFuture<BackgroundImageProvider>(this);
+  }
+
+  @override
+  ImageStream resolve(ImageConfiguration configuration) {
+    return super.resolve(configuration);
+  }
+
+  @override
+  ImageStreamCompleter load(BackgroundImageProvider key) {
+    return new OneFrameImageStreamCompleter(_completer.future);
+  }
+
+  void complete() {
+    _completer.complete(new ImageInfo(image: new TestImage()));
+  }
+
+  @override
+  String toString() => '$runtimeType($hashCode)';
+}
+
+class TestImage extends ui.Image {
+  @override
+  int get width => 100;
+
+  @override
+  int get height => 100;
+
+  @override
+  void dispose() { }
+}
+
 void main() {
   test("Decoration.lerp()", () {
     BoxDecoration a = const BoxDecoration(backgroundColor: const Color(0xFFFFFFFF));
@@ -99,4 +143,59 @@ void main() {
       expect(onChangedCalled, equals(true));
     });
   });
+
+  // Regression test for https://github.com/flutter/flutter/issues/7289.
+  // A reference test would be better.
+  test("BoxDecoration backgroundImage clip", () {
+    void testDecoration({ BoxShape shape, BorderRadius borderRadius, bool expectClip}) {
+      new FakeAsync().run((FakeAsync async) {
+        BackgroundImageProvider imageProvider = new BackgroundImageProvider();
+        BackgroundImage backgroundImage = new BackgroundImage(image: imageProvider);
+
+        BoxDecoration boxDecoration = new BoxDecoration(
+          shape: shape,
+          borderRadius: borderRadius,
+          backgroundImage: backgroundImage,
+        );
+
+        List<Invocation> invocations = <Invocation>[];
+        TestCanvas canvas = new TestCanvas(invocations);
+        ImageConfiguration imageConfiguration = const ImageConfiguration(
+            size: const Size(100.0, 100.0)
+        );
+        bool onChangedCalled = false;
+        BoxPainter boxPainter = boxDecoration.createBoxPainter(() {
+          onChangedCalled = true;
+        });
+
+        // _BoxDecorationPainter._paintBackgroundImage() resolves the background
+        // image and adds a listener to the resolved image stream.
+        boxPainter.paint(canvas, Offset.zero, imageConfiguration);
+        imageProvider.complete();
+
+        // Run the listener which calls onChanged() which saves an internal
+        // reference to the TestImage.
+        async.flushMicrotasks();
+        expect(onChangedCalled, isTrue);
+        boxPainter.paint(canvas, Offset.zero, imageConfiguration);
+
+        // We expect a clip to preceed the drawImageRect call.
+        List<Invocation> commands = canvas.invocations.where((Invocation invocation) {
+          return invocation.memberName == #clipPath || invocation.memberName == #drawImageRect;
+        }).toList();
+        if (expectClip) { // We expect a clip to preceed the drawImageRect call.
+          expect(commands.length, 2);
+          expect(commands[0].memberName, equals(#clipPath));
+          expect(commands[1].memberName, equals(#drawImageRect));
+        } else {
+          expect(commands.length, 1);
+          expect(commands[0].memberName, equals(#drawImageRect));
+        }
+      });
+    }
+
+    testDecoration(shape: BoxShape.circle, expectClip: true);
+    testDecoration(borderRadius: new BorderRadius.all(const Radius.circular(16.0)), expectClip: true);
+    testDecoration(expectClip: false);
+  });
 }