diff --git a/lisp/shell.el b/lisp/shell.el
index c0a82bca18..6198214abe 100644
--- a/lisp/shell.el
+++ b/lisp/shell.el
@@ -942,7 +942,7 @@ shell-prefixed-directory-name
       dir
     (if (file-name-absolute-p dir)
 	;; The name is absolute, so prepend the prefix.
-	(concat comint-file-name-prefix dir)
+	(concat comint-file-name-prefix (file-local-name dir))
       ;; For relative name we assume default-directory already has the prefix.
       (expand-file-name dir))))