diff --git a/tests/data/packages/symlinks/doc/intro b/tests/data/packages/symlinks/doc/intro
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/data/packages/symlinks/docs b/tests/data/packages/symlinks/docs
new file mode 120000
index 000000000..325ab0db6
--- /dev/null
+++ b/tests/data/packages/symlinks/docs
@@ -0,0 +1 @@
+doc
\ No newline at end of file
diff --git a/tests/data/packages/symlinks/setup.cfg b/tests/data/packages/symlinks/setup.cfg
new file mode 100644
index 000000000..01bb95449
--- /dev/null
+++ b/tests/data/packages/symlinks/setup.cfg
@@ -0,0 +1,3 @@
+[egg_info]
+tag_build = dev
+tag_svn_revision = true
diff --git a/tests/data/packages/symlinks/setup.py b/tests/data/packages/symlinks/setup.py
new file mode 100644
index 000000000..b71e35f1e
--- /dev/null
+++ b/tests/data/packages/symlinks/setup.py
@@ -0,0 +1,8 @@
+from setuptools import setup
+
+version = '0.1'
+
+setup(name='symlinks',
+      version=version,
+      packages=["symlinks"],
+      )
diff --git a/tests/data/packages/symlinks/symlinks/__init__.py b/tests/data/packages/symlinks/symlinks/__init__.py
new file mode 100644
index 000000000..792d60054
--- /dev/null
+++ b/tests/data/packages/symlinks/symlinks/__init__.py
@@ -0,0 +1 @@
+#
diff --git a/tests/functional/test_install.py b/tests/functional/test_install.py
index bf0ed96c6..4527c96f5 100644
--- a/tests/functional/test_install.py
+++ b/tests/functional/test_install.py
@@ -208,6 +208,18 @@ def test_install_from_local_directory(script, data):
     assert egg_info_folder in result.files_created, str(result)
 
 
+def test_install_from_local_directory_with_symlinks_to_directories(script, data):
+    """
+    Test installing from a local directory containing symlinks to directories.
+    """
+    to_install = data.packages.join("symlinks")
+    result = script.pip('install', to_install, expect_error=False)
+    pkg_folder = script.site_packages/'symlinks'
+    egg_info_folder = script.site_packages/'symlinks-0.1dev-py%s.egg-info' % pyversion
+    assert pkg_folder in result.files_created, str(result.stdout)
+    assert egg_info_folder in result.files_created, str(result)
+
+
 def test_install_from_local_directory_with_no_setup_py(script, data):
     """
     Test installing from a local directory with no 'setup.py'.