diff --git a/tests/test_subdir.py b/tests/test_subdir.py
new file mode 100644
index 00000000..63569b53
--- /dev/null
+++ b/tests/test_subdir.py
@@ -0,0 +1,29 @@
+"""
+Test if the explict hostname is supplied correctly to the container
+"""
+import logging
+from os.path import abspath, dirname
+
+import pytest
+from repo2docker.app import Repo2Docker
+from tests.conftest import make_test_func
+
+repo_path = dirname(dirname(abspath(__file__)))
+
+def test_subdir():
+    argv = ['--subdir', 'tests/conda/simple', repo_path]
+    make_test_func(argv)()
+
+def test_subdir_invalid(caplog):
+    caplog.set_level(logging.INFO, logger='Repo2Docker')
+
+    app = Repo2Docker()
+    argv = ['--subdir', 'tests/conda/invalid', repo_path]
+    app.initialize(argv)
+    app.debug = True
+    app.run = False
+    with pytest.raises(SystemExit):
+        app.start()  # Just build the image and do not run it.
+
+    # Can't get this to record the logs?
+    # assert caplog.text == "Subdirectory tests/conda/invalid does not exist"