diff --git a/build_tests/typical/carat.rb b/build_tests/typical/carat.rb
index 52acf4f..604ed2b 100644
--- a/build_tests/typical/carat.rb
+++ b/build_tests/typical/carat.rb
@@ -1,9 +1,10 @@
 build do
   Environment.new(echo: :command) do |env|
-    env.append('CPPPATH' => glob('src/**').sort)
+    env.append("CPPPATH" => glob("src/**"))
     FileUtils.mkdir_p(env.build_root)
     FileUtils.mv("src/one/one.c", env.build_root)
+    FileUtils.mv("src/two/two.c", Rscons.application.build_dir)
     env.Object("^/one.o", "^/one.c")
-    env.Program("program.exe", glob('src/**/*.c') + ["^/one.o"])
+    env.Program("^^/program.exe", ["^/one.o", "^^/two.c"])
   end
 end
diff --git a/lib/rscons/environment.rb b/lib/rscons/environment.rb
index c5c47bb..44761ed 100644
--- a/lib/rscons/environment.rb
+++ b/lib/rscons/environment.rb
@@ -475,10 +475,12 @@ module Rscons
       output_fname
     end
 
-    # Expand a path to be relative to the Environment's build root.
+    # Expand paths.
     #
     # Paths beginning with "^/" are expanded by replacing "^" with the
-    # Environment's build root.
+    # Environment's build root (e.g. "build/envname").
+    # Paths beginning with "^^/" are expanded by replacing "^^" with the
+    # top-level build directory (e.g. "build").
     #
     # @param path [String, Array<String>]
     #   The path(s) to expand.
@@ -493,7 +495,7 @@ module Rscons
           expand_path(path)
         end
       else
-        path.sub(%r{^\^(?=[\\/])}, @build_root).gsub("\\", "/")
+        path.sub(%r{^\^\^(?=[\\/])}, Rscons.application.build_dir).sub(%r{^\^(?=[\\/])}, @build_root).gsub("\\", "/")
       end
     end
 
diff --git a/spec/build_tests_spec.rb b/spec/build_tests_spec.rb
index 4bea9ff..ad95cfb 100644
--- a/spec/build_tests_spec.rb
+++ b/spec/build_tests_spec.rb
@@ -338,14 +338,14 @@ EOF
     ]
   end
 
-  it "expands target and source paths starting with ^/ to be relative to the build root" do
+  it "expands target and source paths starting with ^/ and ^^/" do
     test_dir("typical")
-    result = run_rscons(rsconscript: "carat.rb")
+    result = run_rscons(rsconscript: "carat.rb", rscons_args: %w[-b bld])
     expect(result.stderr).to eq ""
     verify_lines(lines(result.stdout), [
-      %r{gcc -c -o build/e.1/one.o -MMD -MF build/e.1/one.o.mf -Isrc -Isrc/one -Isrc/two build/e.1/one.c},
-      %r{gcc -c -o build/e.1/src/two/two.c.o -MMD -MF build/e.1/src/two/two.c.o.mf -Isrc -Isrc/one -Isrc/two src/two/two.c},
-      %r{gcc -o program.exe build/e.1/src/two/two.c.o build/e.1/one.o},
+      %r{gcc -c -o bld/e.1/one.o -MMD -MF bld/e.1/one.o.mf -Isrc -Isrc/one -Isrc/two bld/e.1/one.c},
+      %r{gcc -c -o bld/e.1/bld/two.c.o -MMD -MF bld/e.1/bld/two.c.o.mf -Isrc -Isrc/one -Isrc/two bld/two.c},
+      %r{gcc -o bld/program.exe bld/e.1/one.o bld/e.1/bld/two.c.o},
     ])
   end