diff --git a/programs/cmd/builtins.c b/programs/cmd/builtins.c
index 4c80289829..f38cd9795b 100644
--- a/programs/cmd/builtins.c
+++ b/programs/cmd/builtins.c
@@ -1108,12 +1108,23 @@ void WCMD_setshow_default (char *command) {
 
     /* Change to that directory */
     WINE_TRACE("Really changing to directory '%s'\n", string);
+
     status = SetCurrentDirectory (string);
     if (!status) {
       errorlevel = 1;
       WCMD_print_error ();
       return;
     }
+
+    /* Set special =C: type environment variable */
+    if ((string[1] == ':') && IsCharAlpha (string[0])) {
+      char env[4];
+      strcpy(env, "=");
+      strncpy(env+1, string, 2);
+      env[3] = 0x00;
+      SetEnvironmentVariable(env, string);
+    }
+
    }
   return;
 }
diff --git a/programs/cmd/wcmdmain.c b/programs/cmd/wcmdmain.c
index 1a093fac54..de6aa6d9cf 100644
--- a/programs/cmd/wcmdmain.c
+++ b/programs/cmd/wcmdmain.c
@@ -460,6 +460,17 @@ void WCMD_process_command (char *command)
  */
 
     if ((cmd[1] == ':') && IsCharAlpha (cmd[0]) && (strlen(cmd) == 2)) {
+      char envvar[5];
+      char dir[MAX_PATH];
+
+      /* According to MSDN CreateProcess docs, special env vars record
+         the current directory on each drive, in the form =C:
+         so see if one specified, and if so go back to it             */
+      strcpy(envvar, "=");
+      strcat(envvar, cmd);
+      if (GetEnvironmentVariable(envvar, dir, MAX_PATH) == 0) {
+        sprintf(cmd, "%s\\", cmd);
+      }
       status = SetCurrentDirectory (cmd);
       if (!status) WCMD_print_error ();
       HeapFree( GetProcessHeap(), 0, cmd );