diff --git a/lib/rubygems/commands/build_command.rb b/lib/rubygems/commands/build_command.rb
index eaf8573d8fa8..111f2326a00e 100644
--- a/lib/rubygems/commands/build_command.rb
+++ b/lib/rubygems/commands/build_command.rb
@@ -23,7 +23,9 @@ def initialize
       options[:output] = value
     end
 
-    add_option '-C PATH', '', 'Run as if gem build was started in <PATH> instead of the current working directory.' do |value, options|
+    add_option '-C PATH', '', 'Look for the code of the gem to be built',
+                              'in <PATH>. The GEMSPEC_FILE given as an',
+                              'argument is not influenced by this option' do |value, options|
       options[:build_path] = value
     end
   end
@@ -85,8 +87,7 @@ def build_gem(gem_name)
       spec = Gem::Specification.load(gemspec)
 
       if options[:build_path]
-        Dir.chdir(File.dirname(gemspec)) do
-          spec = Gem::Specification.load(File.basename(gemspec))
+        Dir.chdir(options[:build_path]) do
           build_package(spec)
         end
       else
diff --git a/test/rubygems/test_gem_commands_build_command.rb b/test/rubygems/test_gem_commands_build_command.rb
index 37c3c120a52c..2ef7b06fdbf1 100644
--- a/test/rubygems/test_gem_commands_build_command.rb
+++ b/test/rubygems/test_gem_commands_build_command.rb
@@ -272,6 +272,47 @@ def test_execute_outside_dir
     assert_equal "this is a summary", spec.summary
   end
 
+  def test_execute_outside_dir_with_external_gemspec
+    gemspec_dir = File.join @tempdir, 'gemspec_dir'
+    gemspec_file = File.join gemspec_dir, @gem.spec_name
+
+    gemcode_dir = File.join @tempdir, 'build_command_gem'
+    readme_file = File.join gemcode_dir, 'README.md'
+
+    FileUtils.mkdir_p gemspec_dir
+    FileUtils.mkdir_p gemcode_dir
+
+    File.open readme_file, 'w' do |f|
+      f.write "My awesome gem in nested directory"
+    end
+
+    File.open gemspec_file, 'w' do |gs|
+      gs.write @gem.to_ruby
+    end
+
+    @cmd.options[:build_path] = gemcode_dir
+    @cmd.options[:args] = [gemspec_file]
+
+    use_ui @ui do
+      @cmd.execute
+    end
+
+    output = @ui.output.split "\n"
+    assert_equal "  Successfully built RubyGem", output.shift
+    assert_equal "  Name: some_gem", output.shift
+    assert_equal "  Version: 2", output.shift
+    assert_equal "  File: some_gem-2.gem", output.shift
+    assert_equal [], output
+
+    gem_file = File.join gemcode_dir, File.basename(@gem.cache_file)
+    assert File.exist?(gem_file)
+
+    spec = Gem::Package.new(gem_file).spec
+
+    assert_equal "some_gem", spec.name
+    assert_equal "this is a summary", spec.summary
+  end
+
   def test_can_find_gemspecs_without_dot_gemspec
     gemspec_file = File.join(@tempdir, @gem.spec_name)