diff --git a/v2/test/project_glob.py b/v2/test/project_glob.py
index 39ec39305..fe76b6870 100644
--- a/v2/test/project_glob.py
+++ b/v2/test/project_glob.py
@@ -143,5 +143,38 @@ exe a : [ glob $(pwd)/src/foo/*.cpp $(pwd)/src/bar/*.cpp ] ../d2/d//l ;
 t.run_build_system(subdir="d1")
 t.expect_addition("d1/bin/$toolset/debug/a.exe")
 
+# Regression test: glob excludes used to be broken
+# when building from a subdirectory.
+t.rm(".")
+
+t.write("Jamroot", """ 
+build-project p ;
+""")
+
+t.write("p/p.c", """ 
+int main()
+{
+    return 0;
+}
+
+
+""")
+
+t.write("p/p_x.c", """ 
+int main()
+{
+    return 0;
+}
+
+""")
+
+t.write("p/Jamfile", """ 
+exe p : 
+  [ glob *.c : p_x.c ]
+  ;
+""")
+
+t.run_build_system(subdir="p")
+t.expect_addition("p/bin/$toolset/debug/p.exe")
 
 t.cleanup()
diff --git a/v2/util/path.jam b/v2/util/path.jam
index c7fdf801d..989b5649e 100644
--- a/v2/util/path.jam
+++ b/v2/util/path.jam
@@ -243,7 +243,9 @@ rule glob ( dirs * : patterns + : exclude-patterns * )
     }        
 
     local inc = [ GLOB-RECURSIVELY $(real-patterns) ] ;
+    inc = [ sequence.transform NORMALIZE_PATH : $(inc) ] ;
     local exc = [ GLOB-RECURSIVELY $(real-exclude-patterns) ] ;
+    exc = [ sequence.transform NORMALIZE_PATH : $(exc) ] ;
     
     return [ sequence.transform path.make : 
         [ set.difference $(inc) : $(exc) ] ] ;