diff --git a/src/libcmd/common-eval-args.cc b/src/libcmd/common-eval-args.cc
index 62745b681..ffc1ebd59 100644
--- a/src/libcmd/common-eval-args.cc
+++ b/src/libcmd/common-eval-args.cc
@@ -202,7 +202,7 @@ Bindings * MixEvalArgs::getAutoArgs(EvalState & state)
         auto v = state.allocValue();
         std::visit(overloaded {
             [&](const AutoArgExpr & arg) {
-                state.mkThunk_(*v, state.parseExprFromString(arg.expr, state.rootPath(".")));
+                state.mkThunk_(*v, state.parseExprFromString(arg.expr, true ? state.rootPath(absPath(getCommandBaseDir())) : state.rootPath(".")));
             },
             [&](const AutoArgString & arg) {
                 v->mkString(arg.s);
diff --git a/src/libutil/args/root.hh b/src/libutil/args/root.hh
index 5c55c37a5..34a43b538 100644
--- a/src/libutil/args/root.hh
+++ b/src/libutil/args/root.hh
@@ -29,6 +29,7 @@ struct Completions final : AddCompletions
  */
 class RootArgs : virtual public Args
 {
+protected:
     /**
      * @brief The command's "working directory", but only set when top level.
      *
diff --git a/src/nix-build/nix-build.cc b/src/nix-build/nix-build.cc
index 872295045..cfe183888 100644
--- a/src/nix-build/nix-build.cc
+++ b/src/nix-build/nix-build.cc
@@ -183,6 +183,9 @@ static void main_nix_build(int argc, char * * argv)
     struct MyArgs : LegacyArgs, MixEvalArgs
     {
         using LegacyArgs::LegacyArgs;
+        void setBaseDir(Path baseDir) {
+            commandBaseDir = baseDir;
+        }
     };
 
     MyArgs myArgs(myName, [&](Strings::iterator & arg, const Strings::iterator & end) {
@@ -290,6 +293,9 @@ static void main_nix_build(int argc, char * * argv)
     state->repair = myArgs.repair;
     if (myArgs.repair) buildMode = bmRepair;
 
+    if (inShebang) {
+        myArgs.setBaseDir(absPath(dirOf(script)));
+    }
     auto autoArgs = myArgs.getAutoArgs(*state);
 
     auto autoArgsWithInNixShell = autoArgs;
diff --git a/tests/functional/nix-shell.sh b/tests/functional/nix-shell.sh
index f881acd03..596ac5951 100755
--- a/tests/functional/nix-shell.sh
+++ b/tests/functional/nix-shell.sh
@@ -72,8 +72,9 @@ chmod a+rx $TEST_ROOT/shell.shebang.expr
 ! $TEST_ROOT/shell.shebang.expr bar
 cp shell.nix config.nix $TEST_ROOT
 # Should succeed
+echo "cwd: $PWD"
 output=$($TEST_ROOT/shell.shebang.expr bar)
-[ "$output" = '-e load(ARGV.shift) -- '"$TEST_ROOT"'/shell.shebang.expr bar' ]
+[ "$output" = foo ]
 
 # Test nix-shell shebang mode again with metacharacters in the filename.
 # First word of filename is chosen to not match any file in the test root.
diff --git a/tests/functional/shell.nix b/tests/functional/shell.nix
index 75e3845ea..a7577ff63 100644
--- a/tests/functional/shell.nix
+++ b/tests/functional/shell.nix
@@ -43,6 +43,7 @@ let pkgs = rec {
     ASCII_PERCENT = "%";
     ASCII_AT = "@";
     TEST_inNixShell = if inNixShell then "true" else "false";
+    FOO = fooContents;
     inherit stdenv;
     outputs = ["dev" "out"];
   } // {
diff --git a/tests/functional/shell.shebang.expr b/tests/functional/shell.shebang.expr
new file mode 100755
index 000000000..c602dedbf
--- /dev/null
+++ b/tests/functional/shell.shebang.expr
@@ -0,0 +1,9 @@
+#! @ENV_PROG@ nix-shell
+#! nix-shell "{ script, path, ... }: assert path == ./shell.nix; script { }"
+#! nix-shell --no-substitute
+#! nix-shell --expr 
+#! nix-shell --arg script "import ./shell.nix"
+#! nix-shell --arg path "./shell.nix"
+#! nix-shell -A shellDrv
+#! nix-shell -i bash
+echo "$FOO"