diff --git a/dlls/kernel/process.c b/dlls/kernel/process.c
index d1ff3413df6..4263a226b6c 100644
--- a/dlls/kernel/process.c
+++ b/dlls/kernel/process.c
@@ -1661,7 +1661,11 @@ BOOL WINAPI CreateProcessW( LPCWSTR app_name, LPWSTR cmd_line, LPSECURITY_ATTRIB
 
     if (cur_dir)
     {
-        unixdir = wine_get_unix_file_name( cur_dir );
+        if (!(unixdir = wine_get_unix_file_name( cur_dir )))
+        {
+            SetLastError(ERROR_DIRECTORY);
+            goto done;
+        }
     }
     else
     {
diff --git a/dlls/kernel/tests/process.c b/dlls/kernel/tests/process.c
index b28f28d61a2..245136f4213 100644
--- a/dlls/kernel/tests/process.c
+++ b/dlls/kernel/tests/process.c
@@ -811,6 +811,18 @@ static void test_Directory(void)
     okChildIString("Misc", "CurrDirA", windir);
     release_memory();
     assert(DeleteFileA(resfile) != 0);
+
+    /* search PATH for the exe if directory is NULL */
+    ok(CreateProcessA(NULL, "winver.exe", NULL, NULL, FALSE, 0L, NULL, NULL, &startup, &info), "CreateProcess\n");
+    ok(TerminateProcess(info.hProcess, 0), "Child process termination\n");
+
+    /* if any directory is provided, don't search PATH, error on bad directory */
+    SetLastError(0xdeadbeef);
+    memset(&info, 0, sizeof(info));
+    ok(!CreateProcessA(NULL, "winver.exe", NULL, NULL, FALSE, 0L,
+                       NULL, "non\\existent\\directory", &startup, &info), "CreateProcess\n");
+    ok(GetLastError() == ERROR_DIRECTORY, "Expected ERROR_DIRECTORY, got %ld\n", GetLastError());
+    ok(!TerminateProcess(info.hProcess, 0), "Child process should not exist\n");
 }
 
 static BOOL is_str_env_drive_dir(const char* str)