diff --git a/meson.build b/meson.build
index 74aa2d3a..8ec7a625 100644
--- a/meson.build
+++ b/meson.build
@@ -31,6 +31,7 @@ add_project_arguments(cppflags, language : 'cpp')
 
 config_h = configuration_data()
 config_h.set('_GNU_SOURCE', '1')
+config_h.set_quoted('MESON_BUILD_ROOT', meson.build_root())
 
 prefix = '''#define _GNU_SOURCE 1
 #include <assert.h>
@@ -688,6 +689,23 @@ executable('ptraccel-debug',
 	   install : false
 	   )
 
+# the libinput tools check whether we execute from the builddir, this is
+# the test to verify that lookup. We test twice, once as normal test
+# run from the builddir, once after copying to /tmp
+test_builddir_lookup = executable('test-builddir-lookup',
+				  'tools/test-builddir-lookup.c',
+				  dependencies : [ dep_tools_shared],
+				  include_directories : [includes_src, includes_include],
+				  install : false)
+test('tools-builddir-lookup',
+     test_builddir_lookup,
+     args : ['--builddir-is-set'])
+test('tools-builddir-lookup-installed',
+     find_program('tools/helper-copy-and-exec-from-tmp.sh'),
+     args : [test_builddir_lookup.full_path(), '--builddir-is-null'],
+     env : ['LD_LIBRARY_PATH=@0@'.format(meson.build_root())],
+     workdir : '/tmp')
+
 ############ tests ############
 
 test_symbols_leak = find_program('test/symbols-leak-test.in')
diff --git a/tools/helper-copy-and-exec-from-tmp.sh b/tools/helper-copy-and-exec-from-tmp.sh
new file mode 100755
index 00000000..2ae8ec64
--- /dev/null
+++ b/tools/helper-copy-and-exec-from-tmp.sh
@@ -0,0 +1,18 @@
+#!/bin/bash -x
+#
+# Usage: helper-copy-and-exec-from-tmp.sh /path/to/binary [args]
+#
+# Copies the given binary into a unique file in /tmp and executes it with
+# [args]. Exits with the same return code as the binary did.
+
+executable="$1"
+shift
+
+target_name=$(mktemp)
+cp "$executable" "$target_name"
+chmod +x "$target_name"
+
+"$target_name" "$@"
+rc=$?
+rm "$target_name"
+exit $rc
diff --git a/tools/shared.c b/tools/shared.c
index f2ed1fd0..74c0cdad 100644
--- a/tools/shared.c
+++ b/tools/shared.c
@@ -467,18 +467,51 @@ out:
 	return is_touchpad;
 }
 
+/* Try to read the directory we're executing from and if it matches the
+ * builddir, return it as path. Otherwise, return NULL.
+ */
+char *
+tools_execdir_is_builddir(void)
+{
+	char execdir[PATH_MAX] = {0};
+	char *pathsep;
+	ssize_t sz;
+
+	sz = readlink("/proc/self/exe", execdir, sizeof(execdir) - 1);
+	if (sz <= 0 || sz == sizeof(execdir) - 1)
+		return NULL;
+
+	/* readlink doesn't terminate the string and readlink says
+	   anything past sz is undefined */
+	execdir[sz + 1] = '\0';
+
+	pathsep = strrchr(execdir, '/');
+	if (!pathsep)
+		return NULL;
+
+	*pathsep = '\0';
+	if (!streq(execdir, MESON_BUILD_ROOT))
+		return NULL;
+
+	return safe_strdup(execdir);
+}
+
 static inline void
 setup_path(void)
 {
 	const char *path = getenv("PATH");
 	char new_path[PATH_MAX];
+	char *builddir;
+
+	builddir = tools_execdir_is_builddir();
 
 	snprintf(new_path,
 		 sizeof(new_path),
 		 "%s:%s",
-		 LIBINPUT_TOOL_PATH,
+		 builddir ? builddir : LIBINPUT_TOOL_PATH,
 		 path ? path : "");
 	setenv("PATH", new_path, 1);
+	free(builddir);
 }
 
 int
diff --git a/tools/shared.h b/tools/shared.h
index e30bc39f..364babe6 100644
--- a/tools/shared.h
+++ b/tools/shared.h
@@ -119,4 +119,7 @@ tools_list_device_quirks(struct quirks_context *ctx,
 			 void (*callback)(void *userdata, const char *str),
 			 void *userdata);
 
+char *
+tools_execdir_is_builddir(void);
+
 #endif
diff --git a/tools/test-builddir-lookup.c b/tools/test-builddir-lookup.c
new file mode 100644
index 00000000..fc50b0f6
--- /dev/null
+++ b/tools/test-builddir-lookup.c
@@ -0,0 +1,47 @@
+/*
+ * Copyright © 2018 Red Hat, Inc.
+ *
+ * Permission is hereby granted, free of charge, to any person obtaining a
+ * copy of this software and associated documentation files (the "Software"),
+ * to deal in the Software without restriction, including without limitation
+ * the rights to use, copy, modify, merge, publish, distribute, sublicense,
+ * and/or sell copies of the Software, and to permit persons to whom the
+ * Software is furnished to do so, subject to the following conditions:
+ *
+ * The above copyright notice and this permission notice (including the next
+ * paragraph) shall be included in all copies or substantial portions of the
+ * Software.
+ *
+ * THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND, EXPRESS OR
+ * IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY,
+ * FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.  IN NO EVENT SHALL
+ * THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM, DAMAGES OR OTHER
+ * LIABILITY, WHETHER IN AN ACTION OF CONTRACT, TORT OR OTHERWISE, ARISING
+ * FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE USE OR OTHER
+ * DEALINGS IN THE SOFTWARE.
+ */
+
+#include "config.h"
+#include "libinput-util.h"
+#include "shared.h"
+
+int main(int argc, char **argv) {
+	char *builddir;
+	char *mode;
+
+	assert(argc == 2);
+	mode = argv[1];
+
+	builddir = tools_execdir_is_builddir();
+	if (streq(mode, "--builddir-is-null")) {
+		assert(builddir == NULL);
+	} else if (streq(mode, "--builddir-is-set")) {
+		assert(builddir != NULL);
+		assert(streq(MESON_BUILD_ROOT, builddir));
+		free(builddir);
+	} else {
+		abort();
+	}
+
+	return 0;
+}