diff --git a/README.md b/README.md
index a4a63fd..1a33dfe 100644
--- a/README.md
+++ b/README.md
@@ -60,7 +60,7 @@ And install the wheel in `%install` with `%pyproject_install`:
     %install
     %pyproject_install
 
-`%pyproject_install` installs all wheels in `$PWD/pyproject-wheeldir/`.
+`%pyproject_install` installs all wheels in `pyproject-wheeldir/` located in the root of the source tree.
 
 
 Adding run-time and test-time dependencies
diff --git a/macros.pyproject b/macros.pyproject
index 67afe89..7c72f6c 100644
--- a/macros.pyproject
+++ b/macros.pyproject
@@ -1,5 +1,5 @@
 # This is a directory where wheels are stored and installed from, relative to PWD
-%_pyproject_wheeldir pyproject-wheeldir
+%_pyproject_wheeldir %{_builddir}%{?buildsubdir:/%{buildsubdir}}/pyproject-wheeldir
 
 # This is a directory used as TMPDIR, where pip copies sources to and builds from, relative to PWD
 # For proper debugsource packages, we create TMPDIR within PWD
@@ -8,22 +8,22 @@
 # This will be used in debugsource package paths (applies to extension modules only)
 # NB: pytest collects tests from here if not hidden
 #     https://docs.pytest.org/en/latest/reference.html#confval-norecursedirs
-%_pyproject_builddir .pyproject-builddir
+%_pyproject_builddir %{_builddir}%{?buildsubdir:/%{buildsubdir}}/.pyproject-builddir
 
 %pyproject_files %{_builddir}/pyproject-files
 %pyproject_ghost_distinfo %{_builddir}/pyproject-ghost-distinfo
 %pyproject_record %{_builddir}/pyproject-record
 
 %pyproject_wheel() %{expand:\\\
-mkdir -p "${PWD}/%{_pyproject_builddir}"
-CFLAGS="${CFLAGS:-${RPM_OPT_FLAGS}}" LDFLAGS="${LDFLAGS:-${RPM_LD_FLAGS}}" TMPDIR="${PWD}/%{_pyproject_builddir}" \\\
+mkdir -p "%{_pyproject_builddir}"
+CFLAGS="${CFLAGS:-${RPM_OPT_FLAGS}}" LDFLAGS="${LDFLAGS:-${RPM_LD_FLAGS}}" TMPDIR="%{_pyproject_builddir}" \\\
 %{__python3} -m pip wheel --wheel-dir %{_pyproject_wheeldir} --no-deps --use-pep517 --no-build-isolation --disable-pip-version-check --no-clean --progress-bar off --verbose .
 }
 
 
 %pyproject_install() %{expand:\\\
 specifier=$(ls %{_pyproject_wheeldir}/*.whl | xargs basename --multiple | sed -E 's/([^-]+)-([^-]+)-.+\\\.whl/\\\1==\\\2/')
-TMPDIR="${PWD}/%{_pyproject_builddir}" %{__python3} -m pip install --root %{buildroot} --no-deps --disable-pip-version-check --progress-bar off --verbose --ignore-installed --no-warn-script-location --no-index --no-cache-dir --find-links %{_pyproject_wheeldir} $specifier
+TMPDIR="%{_pyproject_builddir}" %{__python3} -m pip install --root %{buildroot} --no-deps --disable-pip-version-check --progress-bar off --verbose --ignore-installed --no-warn-script-location --no-index --no-cache-dir --find-links %{_pyproject_wheeldir} $specifier
 if [ -d %{buildroot}%{_bindir} ]; then
   %py3_shebang_fix %{buildroot}%{_bindir}/*
   rm -rfv %{buildroot}%{_bindir}/__pycache__
diff --git a/pyproject-rpm-macros.spec b/pyproject-rpm-macros.spec
index 98578bc..29603a0 100644
--- a/pyproject-rpm-macros.spec
+++ b/pyproject-rpm-macros.spec
@@ -112,6 +112,7 @@ export HOSTNAME="rpmbuild"  # to speedup tox in network-less mock, see rhbz#1856
 %changelog
 * Thu May 27 2021 Miro Hrončok <mhroncok@redhat.com> - 0-40
 - Don't leak $TMPDIR outside of pyproject macros
+- Set %%_pyproject_wheeldir and %%_pyproject_builddir relative to the source tree, not $PWD
 
 * Thu Apr 22 2021 Miro Hrončok <mhroncok@redhat.com> - 0-39.2
 - Handle tox provision (tox.requires / tox.minversion)
diff --git a/tests/python-flit-core.spec b/tests/python-flit-core.spec
index 45df12b..d3333d8 100644
--- a/tests/python-flit-core.spec
+++ b/tests/python-flit-core.spec
@@ -5,13 +5,14 @@ Summary:        Distribution-building parts of Flit
 
 License:        BSD
 URL:            https://pypi.org/project/flit-core/
-Source0:        %{pypi_source flit_core}
+Source0:        https://github.com/takluyver/flit/archive/%{version}/flit-%{version}.tar.gz
 
 BuildArch:      noarch
 BuildRequires:  python3-devel
 BuildRequires:  pyproject-rpm-macros
 
 %description
+Test a wheel built from a subdirectory.
 Test a build with pyproject.toml backend-path = .
 flit-core builds with flit-core.
 
@@ -24,15 +25,18 @@ Summary:        %{summary}
 
 
 %prep
-%autosetup -p1 -n flit_core-%{version}
+%autosetup -p1 -n flit-%{version}
 
 
 %generate_buildrequires
+cd flit_core
 %pyproject_buildrequires
-
+cd ..
 
 %build
+cd flit_core
 %pyproject_wheel
+cd ..
 
 
 %install