diff --git a/Modules/CPack.cmake b/Modules/CPack.cmake
index e5721192c..657595731 100644
--- a/Modules/CPack.cmake
+++ b/Modules/CPack.cmake
@@ -63,6 +63,14 @@
 ##end
 #
 ##variable
+#  CPACK_PACKAGE_DIRECTORY - The directory in which CPack is doing its
+#  packaging. If it is not set then this will default (internally) to the
+#  build dir. This variable may be defined in CPack config file or from
+#  the cpack command line option "-B". If set the command line option
+#  override the value found in the config file.
+##end
+#
+##variable
 #  CPACK_PACKAGE_VERSION_MAJOR - Package major Version
 ##end
 #
diff --git a/Source/CPack/cpack.cxx b/Source/CPack/cpack.cxx
index 20824b10d..b6035854e 100644
--- a/Source/CPack/cpack.cxx
+++ b/Source/CPack/cpack.cxx
@@ -207,8 +207,7 @@ int main (int argc, char *argv[])
   std::string helpHTML;
 
   std::string cpackProjectName;
-  std::string cpackProjectDirectory
-    = cmsys::SystemTools::GetCurrentWorkingDirectory();
+  std::string cpackProjectDirectory;
   std::string cpackBuildConfig;
   std::string cpackProjectVersion;
   std::string cpackProjectPatch;
@@ -374,10 +373,24 @@ int main (int argc, char *argv[])
       globalMF->AddDefinition("CPACK_PACKAGE_VENDOR",
         cpackProjectVendor.c_str());
       }
+    // if this is not empty it has been set on the command line
+    // go for it. Command line override values set in config file.
     if ( !cpackProjectDirectory.empty() )
       {
       globalMF->AddDefinition("CPACK_PACKAGE_DIRECTORY",
-        cpackProjectDirectory.c_str());
+                              cpackProjectDirectory.c_str());
+      }
+    // The value has not been set on the command line
+    else
+      {
+      // get a default value (current working directory)
+      cpackProjectDirectory = cmsys::SystemTools::GetCurrentWorkingDirectory();
+      // use default value iff no value has been provided by the config file
+      if (!globalMF->IsSet("CPACK_PACKAGE_DIRECTORY"))
+        {
+        globalMF->AddDefinition("CPACK_PACKAGE_DIRECTORY",
+                                cpackProjectDirectory.c_str());
+        }
       }
     if ( !cpackBuildConfig.empty() )
       {