diff --git a/autoenv.zsh b/autoenv.zsh
index f770d8a..1211f9c 100644
--- a/autoenv.zsh
+++ b/autoenv.zsh
@@ -261,7 +261,7 @@ _autoenv_chpwd_handler() {
     local prev_file prev_dir
     for prev_file in ${_autoenv_stack_entered}; do
       prev_dir=${prev_file:A:h}
-      if ! [[ ${PWD}/ == ${prev_dir}/* ]]; then
+      if ! [[ ${PWD:A}/ == ${prev_dir}/* ]]; then
         local env_file_leave=$prev_dir/$AUTOENV_FILE_LEAVE
         if _autoenv_check_authorized_env_file $env_file_leave; then
           _autoenv_source $env_file_leave leave $prev_dir
diff --git a/tests/cwd.t b/tests/cwd.t
index ea77aa0..32687c2 100644
--- a/tests/cwd.t
+++ b/tests/cwd.t
@@ -24,3 +24,14 @@ The actual tests.
 
   $ cd sub/sub2
   ENTERED: PWD:sub from:cwd.t to:sub2
+
+Check that symlinked dirs get handled correctly.
+
+  $ cd ../..
+  LEFT: PWD:sub from:sub2 to:cwd.t
+  $ ln -s sub sub_linked
+  $ cd sub_linked
+  ENTERED: PWD:sub from:cwd.t to:sub_linked
+  $ cd sub2
+  ENTERED: PWD:sub from:sub_linked to:sub2
+  $ cd .