diff --git a/src/rustup-utils/src/errors.rs b/src/rustup-utils/src/errors.rs
index fc21f9c8e4..10995bf028 100644
--- a/src/rustup-utils/src/errors.rs
+++ b/src/rustup-utils/src/errors.rs
@@ -157,6 +157,9 @@ error_chain! {
             description("failed to set permissions")
             display("failed to set permissions for '{}'", path.display())
         }
+        GettingCwd {
+            description("couldn't get current working directory")
+        }
         CargoHome {
             description("couldn't find value of CARGO_HOME")
         }
diff --git a/src/rustup-utils/src/utils.rs b/src/rustup-utils/src/utils.rs
index b96cfe3d2d..c56c011f04 100644
--- a/src/rustup-utils/src/utils.rs
+++ b/src/rustup-utils/src/utils.rs
@@ -520,8 +520,15 @@ pub fn cargo_home() -> Result<PathBuf> {
         None
     };
 
-    let cwd = env::current_dir().chain_err(|| ErrorKind::CargoHome)?;
-    let cargo_home = env_var.clone().map(|home| cwd.join(home));
+    let cargo_home = if env_var.is_some() {
+        let cwd = try!(env::current_dir().chain_err(|| ErrorKind::GettingCwd));
+        env_var.clone().map(|home| {
+            cwd.join(home)
+        })
+    } else {
+        None
+    };
+
     let user_home = home_dir().map(|p| p.join(".cargo"));
     cargo_home.or(user_home).ok_or(ErrorKind::CargoHome.into())
 }
@@ -716,9 +723,17 @@ pub fn rustup_home_in_user_dir() -> Result<PathBuf> {
 
 pub fn rustup_home() -> Result<PathBuf> {
     let use_rustup_dir = do_rustup_home_upgrade();
+    let rustup_home_env = env::var_os("RUSTUP_HOME");
+
+    let rustup_home = if rustup_home_env.is_some() {
+        let cwd = try!(env::current_dir().chain_err(|| ErrorKind::GettingCwd));
+        rustup_home_env.clone().map(|home| {
+            cwd.join(home)
+        })
+    } else {
+        None
+    };
 
-    let cwd = env::current_dir().chain_err(|| ErrorKind::RustupHome)?;
-    let rustup_home = env::var_os("RUSTUP_HOME").map(|home| cwd.join(home));
     let user_home = if use_rustup_dir {
         dot_dir(".rustup")
     } else {
@@ -822,6 +837,18 @@ fn rename(name: &'static str, src: &Path, dest: &Path) -> Result<()> {
 mod tests {
     use super::*;
 
+    #[test]
+    fn test_cargo_home() {
+        // CARGO_HOME unset, we'll get the default ending in /.cargo
+        let cargo_home1 = cargo_home();
+        let ch = format!("{}", cargo_home1.unwrap().display());
+        assert!(ch.contains("/.cargo"));
+
+        env::set_var("CARGO_HOME", "/test");
+        let cargo_home2 = cargo_home();
+        assert_eq!("/test", format!("{}", cargo_home2.unwrap().display()));
+    }
+
     #[test]
     fn test_toochain_sort() {
         let expected = vec![