diff --git a/Makefile.in b/Makefile.in
index 3df8b1b72..54f17f27f 100644
--- a/Makefile.in
+++ b/Makefile.in
@@ -90,7 +90,7 @@ GNULIB_CFLAGS = $(GNULIB_UTIL_CFLAGS) $(POSIX_CFLAGS)
 ASFLAGS = @ASFLAGS@
 LDFLAGS = @LDFLAGS@ $(LIBS)
 CPPFLAGS = @CPPFLAGS@ -I$(builddir) -I$(builddir)/include -I$(srcdir)/gnulib -I$(srcdir)/include -Wall -W \
-	 -DGRUB_LIBDIR=\"$(libdir)\" -DLOCALEDIR=\"$(localedir)\"
+	 -DGRUB_PKGLIBROOTDIR=\"$(libdir)/`echo @PACKAGE_TARNAME@ | sed '$(transform)'`\" -DLOCALEDIR=\"$(localedir)\"
 TARGET_CC = @TARGET_CC@
 TARGET_CFLAGS = -ffreestanding @TARGET_CFLAGS@
 TARGET_ASFLAGS = -nostdinc -fno-builtin @TARGET_ASFLAGS@
diff --git a/util/grub-mkimage.c b/util/grub-mkimage.c
index cc4a225d4..5602b3a96 100644
--- a/util/grub-mkimage.c
+++ b/util/grub-mkimage.c
@@ -1182,7 +1182,7 @@ Make a bootable image of GRUB.\n\
 \n\
 Report bugs to <%s>.\n\
 "), 
-	      program_name, GRUB_LIBDIR, DEFAULT_DIRECTORY,
+	      program_name, GRUB_PKGLIBROOTDIR, DEFAULT_DIRECTORY,
 	      formats,
 	      PACKAGE_BUGREPORT);
       free (formats);
@@ -1320,14 +1320,15 @@ main (int argc, char *argv[])
 	last = strchr (last + 1, '-');
       if (!last)
 	last = image_target->name + strlen (image_target->name);
-      dir = xmalloc (sizeof (GRUB_LIBDIR) + (last - image_target->name));
-      memcpy (dir, GRUB_LIBDIR, sizeof (GRUB_LIBDIR) - 1);
-      memcpy (dir + sizeof (GRUB_LIBDIR) - 1, image_target->name,
+      dir = xmalloc (sizeof (GRUB_PKGLIBROOTDIR) + (last - image_target->name));
+      memcpy (dir, GRUB_PKGLIBROOTDIR, sizeof (GRUB_PKGLIBROOTDIR) - 1);
+      *(dir + sizeof (GRUB_PKGLIBROOTDIR) - 1) = '/';
+      memcpy (dir + sizeof (GRUB_PKGLIBROOTDIR), image_target->name,
 	      last - image_target->name);
-      *(dir + sizeof (GRUB_LIBDIR) - 1 +  (last - image_target->name)) = 0;
+      *(dir + sizeof (GRUB_PKGLIBROOTDIR) + (last - image_target->name)) = 0;
     }
 
-  generate_image (dir ? : GRUB_LIBDIR, prefix ? : DEFAULT_DIRECTORY, fp,
+  generate_image (dir, prefix ? : DEFAULT_DIRECTORY, fp,
 		  argv + optind, memdisk, font, config,
 		  image_target, note);