diff --git a/gclient_utils.py b/gclient_utils.py
index 04767974e..d21ade51b 100644
--- a/gclient_utils.py
+++ b/gclient_utils.py
@@ -348,12 +348,39 @@ def CheckCallAndFilter(args, stdout=None, filter_fn=None,
 
 def FindGclientRoot(from_dir, filename='.gclient'):
   """Tries to find the gclient root."""
-  path = os.path.realpath(from_dir)
+  real_from_dir = os.path.realpath(from_dir)
+  path = real_from_dir
   while not os.path.exists(os.path.join(path, filename)):
     split_path = os.path.split(path)
     if not split_path[1]:
       return None
     path = split_path[0]
+
+  # If we did not find the file in the current directory, make sure we are in a
+  # sub directory that is controlled by this configuration.
+  if path != real_from_dir:
+    entries_filename = os.path.join(path, filename + '_entries')
+    if not os.path.exists(entries_filename):
+      # If .gclient_entries does not exist, a previous call to gclient sync
+      # might have failed. In that case, we cannot verify that the .gclient
+      # is the one we want to use. In order to not to cause too much trouble,
+      # just issue a warning and return the path anyway.
+      print >>sys.stderr, ("%s file in parent directory %s might not be the "
+          "file you want to use" % (filename, path))
+      return path
+    scope = {}
+    try:
+      exec(FileRead(entries_filename), scope)
+    except SyntaxError, e:
+      SyntaxErrorToError(filename, e)
+    all_directories = scope['entries'].keys()
+    path_to_check = real_from_dir[len(path)+1:]
+    while path_to_check:
+      if path_to_check in all_directories:
+        return path
+      path_to_check = os.path.dirname(path_to_check)
+    return None
+    
   logging.info('Found gclient root at ' + path)
   return path
 
diff --git a/tests/gclient_smoketest.py b/tests/gclient_smoketest.py
index bb877cd5f..29913e27f 100755
--- a/tests/gclient_smoketest.py
+++ b/tests/gclient_smoketest.py
@@ -214,6 +214,19 @@ class GClientSmoke(GClientSmokeBase):
     self.assertTree({})
     self.check(('', '', 0), self.gclient(['status']))
 
+  def testDifferentTopLevelDirectory(self):
+    # Check that even if the .gclient file does not mention the directory src
+    # itself, but it is included via dependencies, the .gclient file is used.
+    self.gclient(['config', self.svn_base + 'trunk/src.DEPS'])
+    deps = join(self.root_dir, 'src.DEPS')
+    os.mkdir(deps)
+    write(join(deps, 'DEPS'),
+        'deps = { "src": "%strunk/src" }' % (self.svn_base))
+    src = join(self.root_dir, 'src')
+    os.mkdir(src)
+    res = self.gclient(['status'], src)
+    self.checkBlock(res[0], [('running', deps), ('running', src)])
+
 
 class GClientSmokeSVN(GClientSmokeBase):
   def setUp(self):
@@ -461,6 +474,48 @@ class GClientSmokeSVN(GClientSmokeBase):
           { 'base': self.svn_base + 'trunk' })
     self.check((out, '', 0), results)
 
+  def testWrongDirectory(self):
+    # Check that we're not using a .gclient configuration which only talks
+    # about a subdirectory src when we're in a different subdirectory src-other.
+    self.gclient(['config', self.svn_base + 'trunk/src/'])
+    self.gclient(['sync'])
+    other_src = join(self.root_dir, 'src-other')
+    os.mkdir(other_src)
+    res = ('', 'Error: client not configured; see \'gclient config\'\n', 1)
+    self.check(res, self.gclient(['status'], other_src))
+
+  def testCorrectDirectory(self):
+    # Check that when we're in the subdirectory src, the .gclient configuration
+    # is used.
+    self.gclient(['config', self.svn_base + 'trunk/src/'])
+    self.gclient(['sync'])
+    src = join(self.root_dir, 'src')
+    res = self.gclient(['status'], src)
+    self.checkBlock(res[0], [('running', src)])
+
+  def testInitialCheckoutNotYetDone(self):
+    # Check that gclient can be executed when the initial checkout hasn't been
+    # done yet.
+    self.gclient(['config', self.svn_base + 'trunk/src/'])
+    self.parseGclient(['sync'],
+                      ['running', 'running',
+                       # This is due to the way svn update is called for a
+                       # single file when File() is used in a DEPS file.
+                       ('running', self.root_dir + '/src/file/other'),
+                       'running', 'running', 'running', 'running'])
+
+  def testInitialCheckoutFailed(self):
+    # Check that gclient can be executed from an arbitrary sub directory if the
+    # initial checkout has failed.
+    self.gclient(['config', self.svn_base + 'trunk/src/'])
+    self.gclient(['sync'])
+    # Cripple the checkout.
+    os.remove(join(self.root_dir, '.gclient_entries'))
+    src = join(self.root_dir, 'src')
+    res = self.gclient(['sync'], src)
+    self.checkBlock(res[0],
+                    ['running', 'running', 'running'])
+
 
 class GClientSmokeGIT(GClientSmokeBase):
   def setUp(self):