diff --git a/src/_pytest/config/findpaths.py b/src/_pytest/config/findpaths.py
index 4f371ec7f..bd1899466 100644
--- a/src/_pytest/config/findpaths.py
+++ b/src/_pytest/config/findpaths.py
@@ -121,28 +121,34 @@ def determine_setup(inifile, args, rootdir_cmd_arg=None, config=None):
                 break
             except KeyError:
                 inicfg = None
-        rootdir = get_common_ancestor(dirs)
+        if rootdir_cmd_arg is None:
+            rootdir = get_common_ancestor(dirs)
     else:
         ancestor = get_common_ancestor(dirs)
         rootdir, inifile, inicfg = getcfg([ancestor], config=config)
-        if rootdir is None:
-            for rootdir in ancestor.parts(reverse=True):
-                if rootdir.join("setup.py").exists():
+        if rootdir is None and rootdir_cmd_arg is None:
+            for possible_rootdir in ancestor.parts(reverse=True):
+                if possible_rootdir.join("setup.py").exists():
+                    rootdir = possible_rootdir
                     break
             else:
-                rootdir, inifile, inicfg = getcfg(dirs, config=config)
+                if dirs != [ancestor]:
+                    rootdir, inifile, inicfg = getcfg(dirs, config=config)
                 if rootdir is None:
-                    rootdir = get_common_ancestor([py.path.local(), ancestor])
+                    if config is not None:
+                        cwd = config.invocation_dir
+                    else:
+                        cwd = py.path.local()
+                    rootdir = get_common_ancestor([cwd, ancestor])
                     is_fs_root = os.path.splitdrive(str(rootdir))[1] == "/"
                     if is_fs_root:
                         rootdir = ancestor
     if rootdir_cmd_arg:
-        rootdir_abs_path = py.path.local(os.path.expandvars(rootdir_cmd_arg))
-        if not os.path.isdir(str(rootdir_abs_path)):
+        rootdir = py.path.local(os.path.expandvars(rootdir_cmd_arg))
+        if not rootdir.isdir():
             raise UsageError(
                 "Directory '{}' not found. Check your '--rootdir' option.".format(
-                    rootdir_abs_path
+                    rootdir
                 )
             )
-        rootdir = rootdir_abs_path
     return rootdir, inifile, inicfg or {}