diff --git a/guix/scripts/environment.scm b/guix/scripts/environment.scm
index fbc202c6589..f4d12f89bf9 100644
--- a/guix/scripts/environment.scm
+++ b/guix/scripts/environment.scm
@@ -675,7 +675,7 @@ message if any test fails."
   (let* ((root (if (string-prefix? "/" root)
                    root
                    (string-append (canonicalize-path (dirname root))
-                                  "/" root))))
+                                  "/" (basename root)))))
     (catch 'system-error
       (lambda ()
         (symlink target root)
diff --git a/tests/guix-environment.sh b/tests/guix-environment.sh
index f8be48f0c0a..afadcbe1950 100644
--- a/tests/guix-environment.sh
+++ b/tests/guix-environment.sh
@@ -1,5 +1,5 @@
 # GNU Guix --- Functional package management for GNU
-# Copyright © 2015, 2016, 2017, 2018, 2019 Ludovic Courtès <ludo@gnu.org>
+# Copyright © 2015, 2016, 2017, 2018, 2019, 2021 Ludovic Courtès <ludo@gnu.org>
 #
 # This file is part of GNU Guix.
 #
@@ -121,6 +121,12 @@ guix environment --bootstrap -r "$gcroot" --ad-hoc guile-bootstrap \
 test `readlink "$gcroot"` = "$expected"
 rm "$gcroot"
 
+# Try '-r' with a relative file name.
+(cd "$tmpdir"; mkdir "gc-root";
+ guix environment --bootstrap -r "gc-root/r" --ad-hoc guile-bootstrap \
+      -- guile -c 1;
+ rm "gc-root/r"; rmdir "gc-root")
+
 # Same with an absolute file name.
 guix environment --bootstrap -r "$PWD/$gcroot" --ad-hoc guile-bootstrap \
      -- guile -c 1