diff --git a/src/cache/inmemory/__tests__/policies.ts b/src/cache/inmemory/__tests__/policies.ts
index 69916c4447c..cae421d2801 100644
--- a/src/cache/inmemory/__tests__/policies.ts
+++ b/src/cache/inmemory/__tests__/policies.ts
@@ -1722,7 +1722,7 @@ describe("type policies", function () {
                   expect(incoming).toBe("initial value");
                   return storage.cached = "merged value";
                 },
-                finalize(existing, { storage }) {
+                drop(existing, { storage }) {
                   expect(existing).toBe("merged value");
                   expect(storage.cached).toBe(existing);
                   delete storage.cached;
@@ -1842,7 +1842,7 @@ describe("type policies", function () {
                     ] : incoming;
                   },
 
-                  finalize(existing) {
+                  drop(existing) {
                     expect(existing).toEqual([
                       { __ref: 'Task:{"taskID":1}' },
                       { __ref: 'Task:{"taskID":2}' },
diff --git a/src/cache/inmemory/entityStore.ts b/src/cache/inmemory/entityStore.ts
index cb4fd90bf0d..ace6dfd498e 100644
--- a/src/cache/inmemory/entityStore.ts
+++ b/src/cache/inmemory/entityStore.ts
@@ -188,48 +188,39 @@ export abstract class EntityStore implements NormalizedCache {
       // that lead from the entity to the nested object within it.
       this.group.assignPaths(dataId, merged);
 
-      // Run finalize functions for fields that are being removed. We consider
-      // only the fields of existing that are shared by incoming, since those
-      // are the only fields that could be changing.
       if (existing) {
-        const context: ReadMergeModifyContext = { store: this };
-
-        const walk = (existing: StoreValue, incoming: StoreValue | undefined) => {
-          if (existing === incoming) return;
-
-          if (Array.isArray(existing)) {
-            (existing as StoreValue[]).forEach((child, i) => {
-              walk(
-                child,
-                incoming && Array.isArray(incoming)
-                  ? incoming[i]
-                  : void 0,
-              );
+        // Collect objects and field names removed by this merge, so we can run
+        // drop functions configured for the fields that are about to removed
+        // (before we finally set this.data[dataId] = merged, below).
+        const drops: [StoreObject, string][] = [];
+
+        const walk = (exVal: StoreValue, inVal: StoreValue | undefined) => {
+          if (exVal === inVal) return;
+
+          if (Array.isArray(exVal)) {
+            (exVal as StoreValue[]).forEach((exChild, i) => {
+              const inChild = inVal && Array.isArray(inVal) ? inVal[i] : void 0;
+              walk(exChild, inChild);
             });
 
-          } else if (storeValueIsStoreObject(existing)) {
-            Object.keys(existing).forEach(storeFieldName => {
-              const eChild = existing[storeFieldName];
-              const iChild = incoming && storeValueIsStoreObject(incoming)
-                ? incoming[storeFieldName]
+          } else if (storeValueIsStoreObject(exVal)) {
+            Object.keys(exVal).forEach(storeFieldName => {
+              const exChild = exVal[storeFieldName];
+              const inChild = inVal && storeValueIsStoreObject(inVal)
+                ? inVal[storeFieldName]
                 : void 0;
 
-              // Visit children before running finalizeField for eChild.
-              walk(eChild, iChild);
+              // Visit children before running dropField for eChild.
+              walk(exChild, inChild);
 
-              if (iChild === void 0) {
-                this.policies.finalizeField(
-                  existing.__typename,
-                  existing,
-                  storeFieldName,
-                  context,
-                );
+              if (inChild === void 0) {
+                drops.push([exVal, storeFieldName]);
               }
             });
           }
         };
 
-        // To detect field removals (in order to run finalize functions), we can
+        // To detect field removals (in order to run drop functions), we can
         // restrict our attention to the incoming fields, since those are the
         // top-level fields that might have changed.
         Object.keys(incoming).forEach(storeFieldName => {
@@ -239,14 +230,22 @@ export abstract class EntityStore implements NormalizedCache {
           walk(eChild, iChild);
 
           if (iChild === void 0) {
-            this.policies.finalizeField(
-              existing.__typename,
-              existing,
+            drops.push([existing, storeFieldName]);
+          }
+        });
+
+        if (drops.length) {
+          const context: ReadMergeModifyContext = { store: this };
+
+          drops.forEach(([storeObject, storeFieldName]) => {
+            this.policies.dropField(
+              storeObject.__typename,
+              storeObject,
               storeFieldName,
               context,
             );
-          }
-        });
+          });
+        }
       }
     }
 
@@ -670,11 +669,13 @@ class CacheGroup {
     if (isReference(parentObjOrRef)) {
       path.push(parentObjOrRef.__ref);
     } else {
-      // See assignPathsAndFinalize to understand how this map is populated.
+      // See assignPaths to understand how this map is populated.
       const assignedPath = this.paths.get(parentObjOrRef);
       if (assignedPath) {
         assignedPath.forEach(push);
       } else {
+        // If we can't find a path for this object, use the object reference
+        // itself as a key.
         path.push(parentObjOrRef);
       }
     }
diff --git a/src/cache/inmemory/policies.ts b/src/cache/inmemory/policies.ts
index 6cc9df73089..4084765bcbf 100644
--- a/src/cache/inmemory/policies.ts
+++ b/src/cache/inmemory/policies.ts
@@ -132,7 +132,7 @@ export type FieldPolicy<
   keyArgs?: KeySpecifier | KeyArgsFunction | false;
   read?: FieldReadFunction<TExisting, TReadResult>;
   merge?: FieldMergeFunction<TExisting, TIncoming> | boolean;
-  finalize?: FieldFinalizeFunction<TExisting>;
+  drop?: FieldDropFunction<TExisting>;
 };
 
 export type StorageType = Record<string, any>;
@@ -223,7 +223,7 @@ export type FieldMergeFunction<TExisting = any, TIncoming = TExisting> = (
   options: FieldFunctionOptions,
 ) => SafeReadonly<TExisting>;
 
-export type FieldFinalizeFunction<TExisting = any> = (
+export type FieldDropFunction<TExisting = any> = (
   existing: SafeReadonly<TExisting> | undefined,
   options: FieldFunctionOptions,
 ) => void;
@@ -276,7 +276,7 @@ export class Policies {
           keyFn?: KeyArgsFunction;
           read?: FieldReadFunction<any>;
           merge?: FieldMergeFunction<any>;
-          finalize?: FieldFinalizeFunction<any>;
+          drop?: FieldDropFunction<any>;
         };
       };
     };
@@ -452,7 +452,7 @@ export class Policies {
         if (typeof incoming === "function") {
           existing.read = incoming;
         } else {
-          const { keyArgs, read, merge, finalize } = incoming;
+          const { keyArgs, read, merge, drop } = incoming;
 
           existing.keyFn =
             // Pass false to disable argument-based differentiation of
@@ -472,8 +472,8 @@ export class Policies {
 
           setMerge(existing, merge);
 
-          if (typeof finalize === "function") {
-            existing.finalize = finalize;
+          if (typeof drop === "function") {
+            existing.drop = drop;
           }
         }
 
@@ -779,7 +779,7 @@ export class Policies {
     return existing;
   }
 
-  public finalizeField(
+  public dropField(
     typename: string | undefined,
     objectOrReference: StoreObject | Reference,
     storeFieldName: string,
@@ -787,9 +787,9 @@ export class Policies {
   ) {
     const fieldName = fieldNameFromStoreName(storeFieldName);
     const policy = this.getFieldPolicy(typename, fieldName, false);
-    const finalize = policy && policy.finalize;
-    if (finalize) {
-      finalize(
+    const drop = policy && policy.drop;
+    if (drop) {
+      drop(
         context.store.getFieldValue(objectOrReference, storeFieldName),
         // TODO Consolidate this code with similiar code in readField?
         makeFieldFunctionOptions(