diff --git a/org.eclipse.jgit.test/tst/org/eclipse/jgit/api/CloneCommandTest.java b/org.eclipse.jgit.test/tst/org/eclipse/jgit/api/CloneCommandTest.java
index 3b2fa6c37..72cc51be9 100644
--- a/org.eclipse.jgit.test/tst/org/eclipse/jgit/api/CloneCommandTest.java
+++ b/org.eclipse.jgit.test/tst/org/eclipse/jgit/api/CloneCommandTest.java
@@ -391,6 +391,17 @@ public void testCloneRepositoryWithSubmodules() throws Exception {
 		git.add().addFilepattern(path)
 				.addFilepattern(Constants.DOT_GIT_MODULES).call();
 		git.commit().setMessage("adding submodule").call();
+		try (SubmoduleWalk walk = SubmoduleWalk.forIndex(git.getRepository())) {
+			assertTrue(walk.next());
+			Repository subRepo = walk.getRepository();
+			addRepoToClose(subRepo);
+			assertNotNull(subRepo);
+			assertEquals(
+					new File(git.getRepository().getWorkTree(), walk.getPath()),
+					subRepo.getWorkTree());
+			assertEquals(new File(new File(git.getRepository().getDirectory(),
+					"modules"), walk.getPath()), subRepo.getDirectory());
+		}
 
 		File directory = createTempDirectory("testCloneRepositoryWithSubmodules");
 		CloneCommand clone = Git.cloneRepository();
diff --git a/org.eclipse.jgit/src/org/eclipse/jgit/api/SubmoduleAddCommand.java b/org.eclipse.jgit/src/org/eclipse/jgit/api/SubmoduleAddCommand.java
index 06c8f414e..fbb24c157 100644
--- a/org.eclipse.jgit/src/org/eclipse/jgit/api/SubmoduleAddCommand.java
+++ b/org.eclipse.jgit/src/org/eclipse/jgit/api/SubmoduleAddCommand.java
@@ -173,6 +173,8 @@ public Repository call() throws GitAPIException {
 		CloneCommand clone = Git.cloneRepository();
 		configure(clone);
 		clone.setDirectory(moduleDirectory);
+		clone.setGitDir(new File(new File(repo.getDirectory(),
+				Constants.MODULES), path));
 		clone.setURI(resolvedUri);
 		if (monitor != null)
 			clone.setProgressMonitor(monitor);