diff --git a/lib/fakefs.rb b/lib/fakefs.rb
index 07a937d..0753734 100644
--- a/lib/fakefs.rb
+++ b/lib/fakefs.rb
@@ -152,11 +152,16 @@ module FakeFS
   module FileSystem
     extend self
 
+    def dir_levels
+      @dir_levels
+    end
+
     def fs
       @fs ||= MockDir.new('.')
     end
 
     def clear
+      @dir_levels = []
       @fs = nil
     end
 
@@ -165,7 +170,7 @@ module FakeFS
     end
 
     def find(path)
-      parts = path_parts(path)
+      parts = path_parts(normalize_path(path))
 
       target = parts[0...-1].inject(fs) do |dir, part|
         dir[part] || {}
@@ -180,7 +185,7 @@ module FakeFS
     end
 
     def add(path, object=MockDir.new)
-      parts = path_parts(path)
+      parts = path_parts(normalize_path(path))
 
       d = parts[0...-1].inject(fs) do |dir, part|
         dir[part] ||= MockDir.new(part, dir)
@@ -220,16 +225,27 @@ module FakeFS
 
     def chdir(dir, &blk)
       raise "you must pass in a block" unless blk
-      @old_fs = @fs
-      @fs = find(dir)
+
+      new_dir = find(dir)
+      raise Errno::ENOENT unless new_dir
+      dir_levels.push dir
       blk.call
     ensure
-      @fs = @old_fs
+      dir_levels.pop
     end
 
     def path_parts(path)
       path.split(File::PATH_SEPARATOR).reject { |part| part.empty? }
     end
+
+    def normalize_path(path)
+      if path[0,1] == '/'
+        File.expand_path(path)
+      else
+        parts = dir_levels + [path]
+        File.expand_path(File.join(*parts))
+      end
+    end
   end
 
   class MockFile
diff --git a/test/fakefs_test.rb b/test/fakefs_test.rb
index a8c0d36..456524b 100644
--- a/test/fakefs_test.rb
+++ b/test/fakefs_test.rb
@@ -171,6 +171,46 @@ class FakeFSTest < Test::Unit::TestCase
     end
   end
 
+  def test_chdir_shouldnt_keep_us_from_absolute_paths
+    FileUtils.mkdir_p '/path'
+
+    Dir.chdir '/path' do
+      File.open('foo', 'w'){|f| f.write 'foo'}
+      File.open('/foobar', 'w'){|f| f.write 'foo'}
+    end
+    assert_equal ['foo'], FileSystem.fs['path'].keys.sort
+    assert_equal ['foobar', 'path'], FileSystem.fs.keys.sort
+
+    Dir.chdir '/path' do
+      FileUtils.rm('foo')
+      FileUtils.rm('/foobar')
+    end
+
+    assert_equal [], FileSystem.fs['path'].keys.sort
+    assert_equal ['path'], FileSystem.fs.keys.sort
+  end
+
+  def test_chdir_should_be_nestable
+    FileUtils.mkdir_p '/path/me'
+    Dir.chdir '/path' do
+      File.open('foo', 'w'){|f| f.write 'foo'}
+      Dir.chdir 'me' do
+        File.open('foobar', 'w'){|f| f.write 'foo'}
+      end
+    end
+
+    assert_equal ['foo','me'], FileSystem.fs['path'].keys.sort
+    assert_equal ['foobar'], FileSystem.fs['path']['me'].keys.sort
+  end
+
+  def test_chdir_should_flop_over_and_die_if_the_dir_doesnt_exist
+    assert_raise(Errno::ENOENT) do
+      Dir.chdir('/nope') do
+        1
+      end
+    end
+  end
+
   def test_chdir_shouldnt_lose_state_because_of_errors
     FileUtils.mkdir_p '/path'