diff --git a/src/cmd/ksh93/bltins/cd_pwd.c b/src/cmd/ksh93/bltins/cd_pwd.c
index b14aa31a9..30a39833f 100644
--- a/src/cmd/ksh93/bltins/cd_pwd.c
+++ b/src/cmd/ksh93/bltins/cd_pwd.c
@@ -92,6 +92,8 @@ int	b_cd(int argc, char *argv[],Shbltin_t *context)
 	oldpwd = path_pwd(shp,0);
 	opwdnod = sh_scoped(shp,OLDPWDNOD);
 	pwdnod = sh_scoped(shp,PWDNOD);
+	if(oldpwd == e_dot && pwdnod->nvalue.cp)
+		oldpwd = (char*)pwdnod->nvalue.cp;  /* if path_pwd() failed to get the pwd, use $PWD */
 	if(shp->subshell)
 	{
 		opwdnod = sh_assignok(opwdnod,1);
@@ -137,8 +139,6 @@ int	b_cd(int argc, char *argv[],Shbltin_t *context)
 				cdpath->shp = shp;
 			}
 		}
-		if(!oldpwd)
-			oldpwd = path_pwd(shp,1);
 	}
 	if(*dir!='/')
 	{
@@ -221,14 +221,31 @@ success:
 	dir = (char*)stakfreeze(1)+PATH_OFFSET;
 	if(*dp && (*dp!='.'||dp[1]) && strchr(dir,'/'))
 		sfputr(sfstdout,dir,'\n');
-	if(*dir != '/')
-		return(0);
 	nv_putval(opwdnod,oldpwd,NV_RDONLY);
-	flag = strlen(dir);
-	/* delete trailing '/' */
-	while(--flag>0 && dir[flag]=='/')
-		dir[flag] = 0;
-	nv_putval(pwdnod,dir,NV_RDONLY);
+	if(*dir == '/')
+	{
+		flag = strlen(dir);
+		/* delete trailing '/' */
+		while(--flag>0 && dir[flag]=='/')
+			dir[flag] = 0;
+		nv_putval(pwdnod,dir,NV_RDONLY);
+	}
+	else
+	{
+		/* pathcanon() failed to canonicalize the directory, which happens when 'cd' is invoked from a
+		   nonexistent PWD with a relative path as the argument. Reinitialize $PWD as it will be wrong. */
+		char *cp = getcwd(NIL(char*),0);
+		if(cp)
+		{
+			nv_putval(pwdnod,cp,NV_RDONLY);
+			free(cp);
+		}
+		else
+		{
+			errormsg(SH_DICT,ERROR_system(1),e_direct);
+			UNREACHABLE();
+		}
+	}
 	nv_onattr(pwdnod,NV_NOFREE|NV_EXPORT);
 	shp->pwd = pwdnod->nvalue.cp;
 	nv_scan(sh_subtracktree(1),rehash,(void*)0,NV_TAGGED,NV_TAGGED);
diff --git a/src/cmd/ksh93/sh/subshell.c b/src/cmd/ksh93/sh/subshell.c
index 4679ea7e0..344b5e8b5 100644
--- a/src/cmd/ksh93/sh/subshell.c
+++ b/src/cmd/ksh93/sh/subshell.c
@@ -219,7 +219,7 @@ void sh_subfork(void)
 		shp->subshell = 0;
 		shp->comsub = 0;
 		sp->subpid=0;
-		shp->st.trapcom[0] = (comsub==2 ? NULL : trap);
+		shp->st.trapcom[0] = (comsub==2 ? NIL(char*) : trap);
 		shp->savesig = 0;
 		/* sh_fork() increases ${.sh.subshell} but we forked an existing virtual subshell, so undo */
 		shgd->realsubshell--;
@@ -581,7 +581,7 @@ Sfio_t *sh_subshell(Shell_t *shp,Shnode_t *t, volatile int flags, int comsub)
 		shp->comsub = comsub;
 		job.bktick_waitall = (comsub==1);
 	}
-	if(!comsub || !shp->subshare)
+	if(!shp->subshare)
 	{
 		struct subshell *xp;
 		sp->shpwd = shp->pwd;
@@ -634,9 +634,9 @@ Sfio_t *sh_subshell(Shell_t *shp,Shnode_t *t, volatile int flags, int comsub)
 				else if(shp->st.trapcom[isig])
 					savsig[isig] = sh_strdup(shp->st.trapcom[isig]);
 				else
-					savsig[isig] = NULL;
+					savsig[isig] = NIL(char*);
 			}
-			/* this nonsense needed for $(trap) */
+			/* this is needed for var=$(trap) */
 			shp->st.otrapcom = (char**)savsig;
 		}
 		sp->cpid = shp->cpid;
@@ -794,7 +794,7 @@ Sfio_t *sh_subshell(Shell_t *shp,Shnode_t *t, volatile int flags, int comsub)
 	job.curpgid = savejobpgid;
 	job.exitval = saveexitval;
 	shp->bckpid = sp->bckpid;
-	if(sp->shpwd)	/* restore environment if saved */
+	if(!shp->subshare)	/* restore environment if saved */
 	{
 		int n;
 		shp->options = sp->options;
@@ -842,24 +842,21 @@ Sfio_t *sh_subshell(Shell_t *shp,Shnode_t *t, volatile int flags, int comsub)
 			free((void*)savsig);
 		}
 		shp->options = sp->options;
-		if(!shp->pwd || strcmp(sp->pwd,shp->pwd))
+		if(shp->pwd != sp->pwd && (!shp->pwd || !sp->pwd || strcmp(sp->pwd,shp->pwd)))
 		{
-			/* restore PWDNOD */
+			/* restore the present working directory */
 			Namval_t *pwdnod = sh_scoped(shp,PWDNOD);
-			if(shp->pwd)
-			{
 #if _lib_fchdir
-				if(fchdir(sp->pwdfd) < 0)
+			if(fchdir(sp->pwdfd) < 0)
 #else
-				if(chdir(sp->pwd) < 0)
+			if(!sp->pwd || chdir(sp->pwd) < 0)
 #endif /* _lib_fchdir */
-				{
-					saveerrno = errno;
-					fatalerror = 2;
-				}
-				shp->pwd=sp->pwd;
-				path_newdir(shp,shp->pathlist);
+			{
+				saveerrno = errno;
+				fatalerror = 2;
 			}
+			shp->pwd=sp->pwd;
+			path_newdir(shp,shp->pathlist);
 			if(nv_isattr(pwdnod,NV_NOFREE))
 				pwdnod->nvalue.cp = (const char*)sp->pwd;
 		}
@@ -939,17 +936,17 @@ Sfio_t *sh_subshell(Shell_t *shp,Shnode_t *t, volatile int flags, int comsub)
 			case 1:
 				shp->toomany = 1;
 				errno = saveerrno;
-				errormsg(SH_DICT,ERROR_system(1),e_redirect);
+				errormsg(SH_DICT,ERROR_SYSTEM|ERROR_PANIC,e_redirect);
 				UNREACHABLE();
 			case 2:
 				/* reinit PWD as it will be wrong */
-				shp->pwd = NULL;
+				shp->pwd = NIL(const char*);
 				path_pwd(shp,0);
 				errno = saveerrno;
-				errormsg(SH_DICT,ERROR_system(1),"Failed to restore PWD upon exiting subshell");
+				errormsg(SH_DICT,ERROR_SYSTEM|ERROR_PANIC,"Failed to restore PWD upon exiting subshell");
 				UNREACHABLE();
 			default:
-				errormsg(SH_DICT,ERROR_system(1),"Subshell error %d",fatalerror);
+				errormsg(SH_DICT,ERROR_SYSTEM|ERROR_PANIC,"Subshell error %d",fatalerror);
 				UNREACHABLE();
 		}
 	}
diff --git a/src/cmd/ksh93/tests/builtins.sh b/src/cmd/ksh93/tests/builtins.sh
index e37b211a0..bd70f010d 100755
--- a/src/cmd/ksh93/tests/builtins.sh
+++ b/src/cmd/ksh93/tests/builtins.sh
@@ -671,8 +671,8 @@ then	(
 			mv t1 t2
 			mkdir t1
 		)
-		[[ -f real_t1 ]] || err_exit 'real_t1 not found after parent directory renamed in subshell'
-	)
+		[[ -f real_t1 ]]
+	) || err_exit 'real_t1 not found after parent directory renamed in subshell'
 fi
 cd "$tmp"
 
@@ -1206,5 +1206,16 @@ then	exp='  version         cat (*) ????-??-??'
 else	warning 'skipping path-bound builtin tests: builtin /opt/ast/bin/cat not found'
 fi
 
+# ======
+# part of https://github.com/ksh93/ksh/issues/153
+mkdir "$tmp/deleted"
+cd "$tmp/deleted"
+tmp=$tmp "$SHELL" -c 'cd /; rmdir "$tmp/deleted"'
+exp=$PWD
+got=$("$SHELL" -c 'cd /; echo "$OLDPWD"' 2>&1)
+[[ $got == "$exp" ]] || err_exit "OLDPWD not correct after cd'ing from a nonexistent PWD" \
+	"(expected $(printf %q "$exp"), got $(printf %q "$got"))"
+cd "$tmp"
+
 # ======
 exit $((Errors<125?Errors:125))
diff --git a/src/cmd/ksh93/tests/subshell.sh b/src/cmd/ksh93/tests/subshell.sh
index 58df83020..968a29f62 100755
--- a/src/cmd/ksh93/tests/subshell.sh
+++ b/src/cmd/ksh93/tests/subshell.sh
@@ -887,17 +887,21 @@ got=$( { "$SHELL" "$tmp/crash_rhbz1117404.ksh"; } 2>&1)
 # ======
 # Segmentation fault when using cd in a subshell, when current directory cannot be determined
 # https://github.com/ksh93/ksh/issues/153
-cd "$tmp"
-mkdir deleted
-cd deleted
+mkdir "$tmp/deleted"
+cd "$tmp/deleted"
 tmp=$tmp "$SHELL" -c 'cd /; rmdir "$tmp/deleted"'
+
+exp="subPWD: ${PWD%/deleted}"$'\n'"mainPWD: $PWD"
+got=$( { "$SHELL" -c '(subshfn() { bad; }; cd ..; echo "subPWD: $PWD"); typeset -f subshfn; echo "mainPWD: $PWD"'; } 2>&1 )
+[[ $got == "$exp" ]] || err_exit "subshell state not restored after 'cd ..' from deleted PWD" \
+	"(expected $(printf %q "$exp"), got $(printf %q "$got"))"
+
 exp="PWD=$PWD"
 got=$( { "$SHELL" -c '(cd /; (cd /)); print -r -- "PWD=$PWD"'; } 2>&1 )
 ((!(e = $?))) && [[ $got == "$exp" ]] || err_exit 'failed to restore nonexistent PWD on exiting a virtual subshell' \
 	"(got status $e$( ((e>128)) && print -n / && kill -l "$e"), $(printf %q "$got"))"
-cd "$tmp"
-mkdir recreated
-cd recreated
+mkdir "$tmp/recreated"
+cd "$tmp/recreated"
 tmp=$tmp "$SHELL" -c 'cd /; rmdir "$tmp/recreated"; mkdir "$tmp/recreated"'
 exp="PWD=$PWD"
 got=$( { "$SHELL" -c '(cd /); print -r -- "PWD=$PWD"'; } 2>&1 )