diff --git a/.gitignore b/.gitignore
index 558e11a..e848fb8 100644
--- a/.gitignore
+++ b/.gitignore
@@ -73,6 +73,7 @@ core
 /tests/provides
 /tests/regress
 /tests/requires
+/tests/symlink
 /tests/sysroot
 /tests/test_env.sh
 /tests/version
diff --git a/Makefile.am b/Makefile.am
index 0d96500..661aaa6 100644
--- a/Makefile.am
+++ b/Makefile.am
@@ -107,6 +107,7 @@ EXTRA_DIST =	pkg.m4 \
 		tests/lib1/tuple-quoting.pc \
 		tests/lib1/empty-tuple.pc \
 		tests/lib1/orphaned-requires-private.pc \
+		tests/lib1/pcfiledir.pc \
 		tests/lib1/sysroot-dir-2.pc \
 		tests/lib1/sysroot-dir-3.pc \
 		tests/lib1/sysroot-dir-4.pc \
@@ -137,6 +138,7 @@ test_scripts=	tests/meson.build \
 		tests/provides.sh \
 		tests/regress.sh \
 		tests/requires.sh \
+		tests/symlink.sh \
 		tests/sysroot.sh \
 		tests/version.sh
 
diff --git a/tests/Kyuafile.in b/tests/Kyuafile.in
index 0b53da7..f50b749 100644
--- a/tests/Kyuafile.in
+++ b/tests/Kyuafile.in
@@ -11,3 +11,4 @@ atf_test_program{name='conflicts'}
 atf_test_program{name='version'}
 atf_test_program{name='framework'}
 atf_test_program{name='provides'}
+atf_test_program{name='symlink'}
diff --git a/tests/lib1/pcfiledir.pc b/tests/lib1/pcfiledir.pc
new file mode 100644
index 0000000..fa6ada9
--- /dev/null
+++ b/tests/lib1/pcfiledir.pc
@@ -0,0 +1,8 @@
+prefix=${pcfiledir}
+exec_prefix=${prefix}
+libdir=${prefix}/lib
+includedir=${prefix}/include
+
+Name: foo
+Description: A testing pkg-config file with a ${pcfiledir}
+Version: 1.2.3
diff --git a/tests/meson.build b/tests/meson.build
index 39ceeeb..56406c3 100644
--- a/tests/meson.build
+++ b/tests/meson.build
@@ -11,8 +11,9 @@ tests = [
   'provides',
   'regress',
   'requires',
+  'symlink',
   'sysroot',
-  'version'
+  'version',
 ]
 
 
diff --git a/tests/symlink.sh b/tests/symlink.sh
new file mode 100755
index 0000000..7f49655
--- /dev/null
+++ b/tests/symlink.sh
@@ -0,0 +1,122 @@
+#!/usr/bin/env atf-sh
+
+. $(atf_get_srcdir)/test_env.sh
+
+tests_init \
+	pcfiledir_symlink_absolute \
+	pcfiledir_symlink_relative
+
+# - We need to create a temporary subtree, since symlinks are not preserved
+#   in "make dist".
+# - ${srcdir} is relative and since we need to compare paths, we would have
+#   to portably canonicalize it again, which is hard. Instead, just keep
+#   the whole thing nested.
+pcfiledir_symlink_absolute_body()
+{
+	mkdir -p tmp/child
+	cp -f "${selfdir}/lib1/pcfiledir.pc" tmp/child/
+	ln -f -s "${PWD}/tmp/child/pcfiledir.pc" tmp/pcfiledir.pc  # absolute
+	ln -f -s tmp/pcfiledir.pc pcfiledir.pc
+
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir.pc
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix tmp/pcfiledir.pc
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix tmp/child/pcfiledir.pc
+
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix "${PWD}/pcfiledir.pc"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix "${PWD}/tmp/pcfiledir.pc"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix "${PWD}/tmp/child/pcfiledir.pc"
+
+	export PKG_CONFIG_PATH="."
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+	export PKG_CONFIG_PATH="${PWD}"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+
+	export PKG_CONFIG_PATH="tmp"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+	export PKG_CONFIG_PATH="${PWD}/tmp"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+
+	export PKG_CONFIG_PATH="tmp/child"
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+	export PKG_CONFIG_PATH="${PWD}/tmp/child"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+}
+
+pcfiledir_symlink_relative_body()
+{
+	mkdir -p tmp/child
+	cp -f "${selfdir}/lib1/pcfiledir.pc" tmp/child/
+	ln -f -s child/pcfiledir.pc tmp/pcfiledir.pc  # relative
+	ln -f -s tmp/pcfiledir.pc pcfiledir.pc
+
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir.pc
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix tmp/pcfiledir.pc
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix tmp/child/pcfiledir.pc
+
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix "${PWD}/pcfiledir.pc"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix "${PWD}/tmp/pcfiledir.pc"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix "${PWD}/tmp/child/pcfiledir.pc"
+
+	export PKG_CONFIG_PATH="."
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+	export PKG_CONFIG_PATH="${PWD}"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+
+	export PKG_CONFIG_PATH="tmp"
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+	export PKG_CONFIG_PATH="${PWD}/tmp"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+
+	export PKG_CONFIG_PATH="tmp/child"
+	atf_check \
+		-o inline:"tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+	export PKG_CONFIG_PATH="${PWD}/tmp/child"
+	atf_check \
+		-o inline:"${PWD}/tmp/child\n" \
+		pkgconf --variable=prefix pcfiledir
+}