diff --git a/meta/lib/oeqa/selftest/cases/bbtests.py b/meta/lib/oeqa/selftest/cases/bbtests.py
index d242352ea2..0da59e0f58 100644
--- a/meta/lib/oeqa/selftest/cases/bbtests.py
+++ b/meta/lib/oeqa/selftest/cases/bbtests.py
@@ -362,3 +362,14 @@ INHERIT:remove = \"report-error\"
 
         result = bitbake('gitunpackoffline-fail -c fetch', ignore_status=True)
         self.assertTrue(re.search("Recipe uses a floating tag/branch .* for repo .* without a fixed SRCREV yet doesn't call bb.fetch2.get_srcrev()", result.output), msg = "Recipe without PV set to SRCPV should have failed: %s" % result.output)
+
+    def test_unexpanded_variable_in_path(self):
+        """
+            Test that bitbake fails if directory contains unexpanded bitbake variable in the name
+        """
+        recipe_name = "gitunpackoffline"
+        self.write_config('PV:pn-gitunpackoffline:append = "+${UNDEFVAL}"')
+        result = bitbake('{}'.format(recipe_name), ignore_status=True)
+        self.assertGreater(result.status, 0, "Build should have failed if ${ is in the path")
+        self.assertTrue(re.search("ERROR: Directory name /.* contains unexpanded bitbake variable. This may cause build failures and WORKDIR polution",
+                                  result.output), msg = "mkdirhier with unexpanded variable should have failed: %s" % result.output)