diff --git a/AUTHORS.txt b/AUTHORS.txt
index e1633b223..17d8c0a43 100644
--- a/AUTHORS.txt
+++ b/AUTHORS.txt
@@ -48,6 +48,7 @@ Paul van der Linden
 Peter Waller
 Phil Whelan
 Piet Delport
+Przemek Wrzos
 Qiangning Hong
 Rafael Caricio
 Rene Dudfield
diff --git a/docs/news.txt b/docs/news.txt
index ac02e162f..ef84737da 100644
--- a/docs/news.txt
+++ b/docs/news.txt
@@ -27,6 +27,10 @@ develop (unreleased)
 * Added "pip show" command to get information about an installed
   package. Fixes #131. Thanks Kelsey Hightower and Rafael Caricio.
 
+* Added `--root` option for "pip install" to specify root directory. Behaves
+  like the same option in distutils but also plays nice with pip's egg-info.
+  (Issue #253)
+
 1.2.1 (2012-09-06)
 ------------------
 
diff --git a/pip/commands/install.py b/pip/commands/install.py
index 9900c434a..99947bdff 100644
--- a/pip/commands/install.py
+++ b/pip/commands/install.py
@@ -172,6 +172,13 @@ class InstallCommand(Command):
             action='store_true',
             help="Install as self contained egg file, like easy_install does.")
 
+        self.parser.add_option(
+            '--root',
+            dest='root_path',
+            metavar='DIR',
+            default=None,
+            help="Install everything relative to this alternate root directory")
+
     def _build_package_finder(self, options, index_urls):
         """
         Create a package finder appropriate to this install command.
@@ -258,7 +265,7 @@ class InstallCommand(Command):
             requirement_set.locate_files()
 
         if not options.no_install and not self.bundle:
-            requirement_set.install(install_options, global_options)
+            requirement_set.install(install_options, global_options, root=options.root_path)
             installed = ' '.join([req.name for req in
                                   requirement_set.successfully_installed])
             if installed:
diff --git a/pip/req.py b/pip/req.py
index 6fa43ac48..dbe7af27b 100644
--- a/pip/req.py
+++ b/pip/req.py
@@ -8,6 +8,7 @@ import shutil
 import tempfile
 import zipfile
 
+from distutils.util import change_root
 from pip.locations import bin_py, running_under_virtualenv
 from pip.exceptions import (InstallationError, UninstallationError,
                             BestVersionAlreadyInstalled,
@@ -557,7 +558,7 @@ exec(compile(open(__file__).read().replace('\\r\\n', '\\n'), __file__, 'exec'))
         name = name.replace(os.path.sep, '/')
         return name
 
-    def install(self, install_options, global_options=()):
+    def install(self, install_options, global_options=(), root=None):
         if self.editable:
             self.install_editable(install_options, global_options)
             return
@@ -576,6 +577,9 @@ exec(compile(open(__file__).read().replace('\\r\\n', '\\n'), __file__, 'exec'))
             if not self.as_egg:
                 install_args += ['--single-version-externally-managed']
 
+            if root is not None:
+                install_args += ['--root', root]
+
             if running_under_virtualenv():
                 ## FIXME: I'm not sure if this is a reasonable location; probably not
                 ## but we can't put it in the default location, as that is a virtualenv symlink that isn't writable
@@ -598,11 +602,17 @@ exec(compile(open(__file__).read().replace('\\r\\n', '\\n'), __file__, 'exec'))
                 # so we unable to save the installed-files.txt
                 return
 
+            def prepend_root(path):
+                if root is None or not os.path.isabs(path):
+                    return path
+                else:
+                    return change_root(root, path)
+
             f = open(record_filename)
             for line in f:
                 line = line.strip()
                 if line.endswith('.egg-info'):
-                    egg_info_dir = line
+                    egg_info_dir = prepend_root(line)
                     break
             else:
                 logger.warn('Could not find .egg-info directory in install record for %s' % self)
@@ -616,7 +626,7 @@ exec(compile(open(__file__).read().replace('\\r\\n', '\\n'), __file__, 'exec'))
                 filename = line.strip()
                 if os.path.isdir(filename):
                     filename += os.path.sep
-                new_lines.append(make_path_relative(filename, egg_info_dir))
+                new_lines.append(make_path_relative(prepend_root(filename), egg_info_dir))
             f.close()
             f = open(os.path.join(egg_info_dir, 'installed-files.txt'), 'w')
             f.write('\n'.join(new_lines)+'\n')
@@ -1151,7 +1161,7 @@ class RequirementSet(object):
                 _write_delete_marker_message(os.path.join(location, PIP_DELETE_MARKER_FILENAME))
             return retval
 
-    def install(self, install_options, global_options=()):
+    def install(self, install_options, global_options=(), *args, **kwargs):
         """Install everything in this set (after having downloaded and unpacked the packages)"""
         to_install = [r for r in self.requirements.values()
                       if not r.satisfied_by]
@@ -1170,7 +1180,7 @@ class RequirementSet(object):
                     finally:
                         logger.indent -= 2
                 try:
-                    requirement.install(install_options, global_options)
+                    requirement.install(install_options, global_options, *args, **kwargs)
                 except:
                     # if install did not succeed, rollback previous uninstall
                     if requirement.conflicts_with and not requirement.install_succeeded:
diff --git a/tests/test_basic.py b/tests/test_basic.py
index e1b990a35..d5a054b14 100644
--- a/tests/test_basic.py
+++ b/tests/test_basic.py
@@ -491,6 +491,18 @@ def test_install_package_with_target():
     assert Path('scratch')/'target'/'initools' in result.files_created, str(result)
 
 
+def test_install_package_with_root():
+    """
+    Test installing a package using pip install --root
+    """
+    env = reset_env()
+    root_dir = env.scratch_path/'root'
+    result = run_pip('install', '--root', root_dir, '--install-option=--home=',
+                     '--install-option=--install-lib=/lib/python', "initools==0.1")
+
+    assert Path('scratch')/'root'/'lib'/'python'/'initools' in result.files_created, str(result)
+
+
 def test_find_command_folder_in_path():
     """
     If a folder named e.g. 'git' is in PATH, and find_command is looking for