diff --git a/changelog.d/7977.bugfix b/changelog.d/7977.bugfix
new file mode 100644
index 0000000000..c587f13055
--- /dev/null
+++ b/changelog.d/7977.bugfix
@@ -0,0 +1 @@
+Fix a bug introduced in Synapse v1.7.2 which caused inaccurate membership counts in the room directory.
diff --git a/synapse/handlers/stats.py b/synapse/handlers/stats.py
index 149f861239..249ffe2a55 100644
--- a/synapse/handlers/stats.py
+++ b/synapse/handlers/stats.py
@@ -232,7 +232,7 @@ class StatsHandler:
 
                 if membership == prev_membership:
                     pass  # noop
-                if membership == Membership.JOIN:
+                elif membership == Membership.JOIN:
                     room_stats_delta["joined_members"] += 1
                 elif membership == Membership.INVITE:
                     room_stats_delta["invited_members"] += 1
diff --git a/synapse/storage/data_stores/main/schema/delta/58/12room_stats.sql b/synapse/storage/data_stores/main/schema/delta/58/12room_stats.sql
new file mode 100644
index 0000000000..cade5dcca8
--- /dev/null
+++ b/synapse/storage/data_stores/main/schema/delta/58/12room_stats.sql
@@ -0,0 +1,32 @@
+/* Copyright 2020 The Matrix.org Foundation C.I.C.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *    http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+-- Recalculate the stats for all rooms after the fix to joined_members erroneously
+-- incrementing on per-room profile changes.
+
+-- Note that the populate_stats_process_rooms background update is already set to
+-- run if you're upgrading from Synapse <1.0.0.
+
+-- Additionally, if you've upgraded to v1.18.0 (which doesn't include this fix),
+-- this bg job runs, and then update to v1.19.0, you'd end up with only half of
+-- your rooms having room stats recalculated after this fix was in place.
+
+-- So we've switched the old `populate_stats_process_rooms` background job to a
+-- no-op, and then kick off a bg job with a new name, but with the same
+-- functionality as the old one. This effectively restarts the background job
+-- from the beginning, without running it twice in a row, supporting both
+-- upgrade usecases.
+INSERT INTO background_updates (update_name, progress_json) VALUES
+    ('populate_stats_process_rooms_2', '{}');
diff --git a/synapse/storage/data_stores/main/stats.py b/synapse/storage/data_stores/main/stats.py
index 922400a7c3..40db8f594e 100644
--- a/synapse/storage/data_stores/main/stats.py
+++ b/synapse/storage/data_stores/main/stats.py
@@ -72,6 +72,9 @@ class StatsStore(StateDeltasStore):
         self.db.updates.register_background_update_handler(
             "populate_stats_process_rooms", self._populate_stats_process_rooms
         )
+        self.db.updates.register_background_update_handler(
+            "populate_stats_process_rooms_2", self._populate_stats_process_rooms_2
+        )
         self.db.updates.register_background_update_handler(
             "populate_stats_process_users", self._populate_stats_process_users
         )
@@ -140,11 +143,30 @@ class StatsStore(StateDeltasStore):
         return len(users_to_work_on)
 
     async def _populate_stats_process_rooms(self, progress, batch_size):
+        """
+        This was a background update which regenerated statistics for rooms.
+
+        It has been replaced by StatsStore._populate_stats_process_rooms_2. This background
+        job has been scheduled to run as part of Synapse v1.0.0, and again now. To ensure
+        someone upgrading from <v1.0.0, this background task has been turned into a no-op
+        so that the potentially expensive task is not run twice.
+
+        Further context: https://github.com/matrix-org/synapse/pull/7977
+        """
+        await self.db.updates._end_background_update("populate_stats_process_rooms")
+        return 1
+
+    async def _populate_stats_process_rooms_2(self, progress, batch_size):
         """
         This is a background update which regenerates statistics for rooms.
+
+        It replaces StatsStore._populate_stats_process_rooms. See its docstring for the
+        reasoning.
         """
         if not self.stats_enabled:
-            await self.db.updates._end_background_update("populate_stats_process_rooms")
+            await self.db.updates._end_background_update(
+                "populate_stats_process_rooms_2"
+            )
             return 1
 
         last_room_id = progress.get("last_room_id", "")
@@ -160,12 +182,14 @@ class StatsStore(StateDeltasStore):
             return [r for r, in txn]
 
         rooms_to_work_on = await self.db.runInteraction(
-            "populate_stats_rooms_get_batch", _get_next_batch
+            "populate_stats_rooms_2_get_batch", _get_next_batch
         )
 
         # No more rooms -- complete the transaction.
         if not rooms_to_work_on:
-            await self.db.updates._end_background_update("populate_stats_process_rooms")
+            await self.db.updates._end_background_update(
+                "populate_stats_process_rooms_2"
+            )
             return 1
 
         for room_id in rooms_to_work_on:
@@ -173,9 +197,9 @@ class StatsStore(StateDeltasStore):
             progress["last_room_id"] = room_id
 
         await self.db.runInteraction(
-            "_populate_stats_process_rooms",
+            "_populate_stats_process_rooms_2",
             self.db.updates._background_update_progress_txn,
-            "populate_stats_process_rooms",
+            "populate_stats_process_rooms_2",
             progress,
         )
 
diff --git a/tests/handlers/test_stats.py b/tests/handlers/test_stats.py
index d9d312f0fb..5dc3795643 100644
--- a/tests/handlers/test_stats.py
+++ b/tests/handlers/test_stats.py
@@ -54,7 +54,7 @@ class StatsRoomTests(unittest.HomeserverTestCase):
             self.store.db.simple_insert(
                 "background_updates",
                 {
-                    "update_name": "populate_stats_process_rooms",
+                    "update_name": "populate_stats_process_rooms_2",
                     "progress_json": "{}",
                     "depends_on": "populate_stats_prepare",
                 },
@@ -66,7 +66,7 @@ class StatsRoomTests(unittest.HomeserverTestCase):
                 {
                     "update_name": "populate_stats_process_users",
                     "progress_json": "{}",
-                    "depends_on": "populate_stats_process_rooms",
+                    "depends_on": "populate_stats_process_rooms_2",
                 },
             )
         )
@@ -219,7 +219,10 @@ class StatsRoomTests(unittest.HomeserverTestCase):
         self.get_success(
             self.store.db.simple_insert(
                 "background_updates",
-                {"update_name": "populate_stats_process_rooms", "progress_json": "{}"},
+                {
+                    "update_name": "populate_stats_process_rooms_2",
+                    "progress_json": "{}",
+                },
             )
         )
         self.get_success(
@@ -228,7 +231,7 @@ class StatsRoomTests(unittest.HomeserverTestCase):
                 {
                     "update_name": "populate_stats_cleanup",
                     "progress_json": "{}",
-                    "depends_on": "populate_stats_process_rooms",
+                    "depends_on": "populate_stats_process_rooms_2",
                 },
             )
         )
@@ -346,6 +349,37 @@ class StatsRoomTests(unittest.HomeserverTestCase):
 
         self.assertEqual(r1stats_post["total_events"] - r1stats_ante["total_events"], 1)
 
+    def test_updating_profile_information_does_not_increase_joined_members_count(self):
+        """
+        Check that the joined_members count does not increase when a user changes their
+        profile information (which is done by sending another join membership event into
+        the room.
+        """
+        self._perform_background_initial_update()
+
+        # Create a user and room
+        u1 = self.register_user("u1", "pass")
+        u1token = self.login("u1", "pass")
+        r1 = self.helper.create_room_as(u1, tok=u1token)
+
+        # Get the current room stats
+        r1stats_ante = self._get_current_stats("room", r1)
+
+        # Send a profile update into the room
+        new_profile = {"displayname": "bob"}
+        self.helper.change_membership(
+            r1, u1, u1, "join", extra_data=new_profile, tok=u1token
+        )
+
+        # Get the new room stats
+        r1stats_post = self._get_current_stats("room", r1)
+
+        # Ensure that the user count did not changed
+        self.assertEqual(r1stats_post["joined_members"], r1stats_ante["joined_members"])
+        self.assertEqual(
+            r1stats_post["local_users_in_room"], r1stats_ante["local_users_in_room"]
+        )
+
     def test_send_state_event_nonoverwriting(self):
         """
         When we send a non-overwriting state event, it increments total_events AND current_state_events
@@ -694,7 +728,7 @@ class StatsRoomTests(unittest.HomeserverTestCase):
             self.store.db.simple_insert(
                 "background_updates",
                 {
-                    "update_name": "populate_stats_process_rooms",
+                    "update_name": "populate_stats_process_rooms_2",
                     "progress_json": "{}",
                     "depends_on": "populate_stats_prepare",
                 },
@@ -706,7 +740,7 @@ class StatsRoomTests(unittest.HomeserverTestCase):
                 {
                     "update_name": "populate_stats_process_users",
                     "progress_json": "{}",
-                    "depends_on": "populate_stats_process_rooms",
+                    "depends_on": "populate_stats_process_rooms_2",
                 },
             )
         )
diff --git a/tests/rest/client/v1/utils.py b/tests/rest/client/v1/utils.py
index 7f8252330a..51941f99f9 100644
--- a/tests/rest/client/v1/utils.py
+++ b/tests/rest/client/v1/utils.py
@@ -88,7 +88,28 @@ class RestHelper(object):
             expect_code=expect_code,
         )
 
-    def change_membership(self, room, src, targ, membership, tok=None, expect_code=200):
+    def change_membership(
+        self,
+        room: str,
+        src: str,
+        targ: str,
+        membership: str,
+        extra_data: dict = {},
+        tok: Optional[str] = None,
+        expect_code: int = 200,
+    ) -> None:
+        """
+        Send a membership state event into a room.
+
+        Args:
+            room: The ID of the room to send to
+            src: The mxid of the event sender
+            targ: The mxid of the event's target. The state key
+            membership: The type of membership event
+            extra_data: Extra information to include in the content of the event
+            tok: The user access token to use
+            expect_code: The expected HTTP response code
+        """
         temp_id = self.auth_user_id
         self.auth_user_id = src
 
@@ -97,6 +118,7 @@ class RestHelper(object):
             path = path + "?access_token=%s" % tok
 
         data = {"membership": membership}
+        data.update(extra_data)
 
         request, channel = make_request(
             self.hs.get_reactor(), "PUT", path, json.dumps(data).encode("utf8")