diff --git a/lib/index.js b/lib/index.js
index 7447a2f..d1f5704 100644
--- a/lib/index.js
+++ b/lib/index.js
@@ -251,7 +251,17 @@ function derefSchema (schema, options, state) {
             delete node.$ref
             newValue = _.merge({}, newValue, node)
           }
-          this.update(newValue)
+          // Only walk into a resolved value the first time it is substituted.
+          // The same object is reused at every site pointing at that ref, so
+          // re-walking it repeats work already done - and when refs nest, each
+          // level is re-walked once per path that reaches it, which is
+          // exponential in the number of definitions.
+          const alreadyResolved =
+            newValue !== null && typeof newValue === 'object' && state.resolved.has(newValue)
+          if (newValue !== null && typeof newValue === 'object') {
+            state.resolved.add(newValue)
+          }
+          this.update(newValue, alreadyResolved)
           if (state.missing.indexOf(refVal) !== -1) {
             state.missing.splice(state.missing.indexOf(refVal), 1)
           }
@@ -293,7 +303,11 @@ function deref (schema, options) {
     circularRefs: [],
     cwd: cwd,
     missing: [],
-    history: []
+    history: [],
+    // Values already dereferenced during this call. A resolved ref is shared -
+    // the same object is substituted at every site that points at it - so once
+    // one has been walked there is nothing left to do on later substitutions.
+    resolved: new WeakSet()
   }
 
   try {