diff --git a/CHANGES.rst b/CHANGES.rst
index 8367775..6e2e77f 100644
--- a/CHANGES.rst
+++ b/CHANGES.rst
@@ -7,7 +7,10 @@ Changelog
 
 * Restore warning about files included in the sdist but not added to the
   version control system (`issue #27
-  <https://github.com/mgedmin/check-manifest/issues/27>`__),
+  <https://github.com/mgedmin/check-manifest/issues/27>`__).
+
+* Fix ``check-manifest relative/pathname`` (`issue #28
+  <https://github.com/mgedmin/check-manifest/issues/28>`__).
 
 
 0.19 (2014-02-09)
diff --git a/check_manifest.py b/check_manifest.py
index a701d09..218a0ee 100755
--- a/check_manifest.py
+++ b/check_manifest.py
@@ -577,7 +577,7 @@ def check_manifest(source_tree='.', create=False, update=False,
     """
     all_ok = True
     with cd(source_tree):
-        if not is_package(source_tree):
+        if not is_package():
             raise Failure('This is not a Python project (no setup.py).')
         read_config()
         read_manifest()
diff --git a/tests.py b/tests.py
index 59ad6a8..e1dc371 100644
--- a/tests.py
+++ b/tests.py
@@ -979,6 +979,14 @@ def test_all_is_well(self):
         self._create_repo_with_code()
         self.assertTrue(check_manifest())
 
+    def test_relative_pathname(self):
+        from check_manifest import check_manifest
+        os.mkdir('subdir')
+        os.chdir('subdir')
+        self._create_repo_with_code()
+        os.chdir(os.pardir)
+        self.assertTrue(check_manifest('subdir'))
+
     def test_suggestions(self):
         from check_manifest import check_manifest
         self._create_repo_with_code()