diff --git a/src/Microsoft.AspNetCore.Hosting/WebHostBuilder.cs b/src/Microsoft.AspNetCore.Hosting/WebHostBuilder.cs
index 41dc917029..33d3e7cc11 100644
--- a/src/Microsoft.AspNetCore.Hosting/WebHostBuilder.cs
+++ b/src/Microsoft.AspNetCore.Hosting/WebHostBuilder.cs
@@ -3,6 +3,7 @@
 
 using System;
 using System.Diagnostics;
+using System.IO;
 using System.Runtime.Versioning;
 using Microsoft.AspNetCore.Builder;
 using Microsoft.AspNetCore.Hosting.Builder;
@@ -84,7 +85,7 @@ namespace Microsoft.AspNetCore.Hosting
         }
 
         /// <summary>
-        /// Specify the startup type to be used by the web host. 
+        /// Specify the startup type to be used by the web host.
         /// </summary>
         /// <param name="startupType">The <see cref="Type"/> to be used.</param>
         /// <returns>The <see cref="IWebHostBuilder"/>.</returns>
@@ -111,7 +112,7 @@ namespace Microsoft.AspNetCore.Hosting
         }
 
         /// <summary>
-        /// Specify the startup method to be used to configure the web application. 
+        /// Specify the startup method to be used to configure the web application.
         /// </summary>
         /// <param name="configureApplication">The delegate that configures the <see cref="IApplicationBuilder"/>.</param>
         /// <returns>The <see cref="IWebHostBuilder"/>.</returns>
@@ -224,7 +225,7 @@ namespace Microsoft.AspNetCore.Hosting
         {
             public WrappedApplicationEnvironment(string applicationBasePath, IApplicationEnvironment env)
             {
-                ApplicationBasePath = applicationBasePath;
+                ApplicationBasePath = ResolvePath(applicationBasePath);
                 ApplicationName = env.ApplicationName;
                 ApplicationVersion = env.ApplicationVersion;
                 RuntimeFramework = env.RuntimeFramework;
@@ -238,5 +239,22 @@ namespace Microsoft.AspNetCore.Hosting
 
             public FrameworkName RuntimeFramework { get; }
         }
+
+        private static string ResolvePath(string applicationBasePath)
+        {
+            if (Path.IsPathRooted(applicationBasePath))
+            {
+                return applicationBasePath;
+            }
+
+            var basePath =
+#if NET451
+                (string)AppDomain.CurrentDomain.GetData("APP_CONTEXT_BASE_DIRECTORY") ??
+                AppDomain.CurrentDomain.BaseDirectory;
+#else
+                AppContext.BaseDirectory;
+#endif
+            return Path.Combine(Path.GetFullPath(basePath), applicationBasePath);
+        }
     }
 }
diff --git a/test/Microsoft.AspNetCore.Hosting.Tests/WebHostBuilderTests.cs b/test/Microsoft.AspNetCore.Hosting.Tests/WebHostBuilderTests.cs
index a3f60e73a3..9e9f7a351c 100644
--- a/test/Microsoft.AspNetCore.Hosting.Tests/WebHostBuilderTests.cs
+++ b/test/Microsoft.AspNetCore.Hosting.Tests/WebHostBuilderTests.cs
@@ -155,7 +155,7 @@ namespace Microsoft.AspNetCore.Hosting
                 .UseSetting(WebHostDefaults.ServerKey, "ServerB")
                 .UseServer(new TestServer())
                 .UseStartup<StartupNoServices>();
-            
+
             var host = (WebHost)hostBuilder.Build();
 
             Assert.Equal("ServerB", host.ServerFactoryLocation);
@@ -304,6 +304,19 @@ namespace Microsoft.AspNetCore.Hosting
             Assert.Equal("/foo/bar", host.Services.GetService<IApplicationEnvironment>().ApplicationBasePath);
         }
 
+        [Fact]
+        public void RelativeApplicationBaseAreResolved()
+        {
+            var builder = new ConfigurationBuilder();
+            var host = new WebHostBuilder()
+                .UseApplicationBasePath("bar")
+                .UseServer(new TestServer())
+                .UseStartup("Microsoft.AspNetCore.Hosting.Tests")
+                .Build();
+
+            Assert.Equal(Path.GetFullPath("bar"), host.Services.GetService<IApplicationEnvironment>().ApplicationBasePath);
+        }
+
         private IWebHostBuilder CreateWebHostBuilder()
         {
             var vals = new Dictionary<string, string>