diff --git a/mk-poetry-dep.nix b/mk-poetry-dep.nix
index 097b5f80d..feab59fb8 100644
--- a/mk-poetry-dep.nix
+++ b/mk-poetry-dep.nix
@@ -178,54 +178,61 @@ pythonPackages.callPackage
       # Interpreters should declare what wheel types they're compatible with (python type + ABI)
       # Here we can then choose a file based on that info.
       src =
-        if isGit then
-          (
-            builtins.fetchGit ({
-              inherit (source) url;
-              rev = source.resolved_reference or source.reference;
-              ref = sourceSpec.branch or (if sourceSpec ? tag then "refs/tags/${sourceSpec.tag}" else "HEAD");
-            } // (
-              lib.optionalAttrs
-                (((sourceSpec ? rev) || (sourceSpec ? branch) || (source ? resolved_reference) || (source ? reference))
-                  && (lib.versionAtLeast builtins.nixVersion "2.4"))
+        let
+          srcRoot =
+            if isGit then
+              (
+                builtins.fetchGit ({
+                  inherit (source) url;
+                  rev = source.resolved_reference or source.reference;
+                  ref = sourceSpec.branch or (if sourceSpec ? tag then "refs/tags/${sourceSpec.tag}" else "HEAD");
+                } // (
+                  lib.optionalAttrs
+                    (((sourceSpec ? rev) || (sourceSpec ? branch) || (source ? resolved_reference) || (source ? reference))
+                      && (lib.versionAtLeast builtins.nixVersion "2.4"))
+                    {
+                      allRefs = true;
+                    }) // (
+                  lib.optionalAttrs (lib.versionAtLeast builtins.nixVersion "2.4") {
+                    submodules = true;
+                  })
+                )
+              )
+            else if isWheelUrl then
+              builtins.fetchurl
                 {
-                  allRefs = true;
-                }) // (
-              lib.optionalAttrs (lib.versionAtLeast builtins.nixVersion "2.4") {
-                submodules = true;
-              })
-            )
-          )
-        else if isWheelUrl then
-          builtins.fetchurl
-            {
-              inherit (source) url;
-              sha256 = fileInfo.hash;
-            }
-        else if isUrl then
-          builtins.fetchTarball
-            {
-              inherit (source) url;
-              sha256 = fileInfo.hash;
-            }
-        else if isDirectory then
-          (poetryLib.cleanPythonSources { src = localDepPath; })
-        else if isFile then
-          localDepPath
-        else if isLegacy then
-          fetchFromLegacy
-            {
-              pname = name;
-              inherit python;
-              inherit (fileInfo) file hash;
-              inherit (source) url;
-            }
+                  inherit (source) url;
+                  sha256 = fileInfo.hash;
+                }
+            else if isUrl then
+              builtins.fetchTarball
+                {
+                  inherit (source) url;
+                  sha256 = fileInfo.hash;
+                }
+            else if isDirectory then
+              (poetryLib.cleanPythonSources { src = localDepPath; })
+            else if isFile then
+              localDepPath
+            else if isLegacy then
+              fetchFromLegacy
+                {
+                  pname = name;
+                  inherit python;
+                  inherit (fileInfo) file hash;
+                  inherit (source) url;
+                }
+            else
+              fetchFromPypi {
+                pname = name;
+                inherit (fileInfo) file hash kind;
+                inherit version;
+              };
+        in
+        if source ? subdirectory then
+          srcRoot + "/${source.subdirectory}"
         else
-          fetchFromPypi {
-            pname = name;
-            inherit (fileInfo) file hash kind;
-            inherit version;
-          };
+          srcRoot;
     }
   )
 { }
diff --git a/tests/default.nix b/tests/default.nix
index 4edb9078c..4b9270e3f 100644
--- a/tests/default.nix
+++ b/tests/default.nix
@@ -141,6 +141,7 @@ in
   contourpy-no-wheel = callTest ./contourpy-no-wheel { };
   pytesseract = callTest ./pytesseract { };
   sphinx5 = callTest ./sphinx5 { };
+  subdirectory = callTest ./subdirectory { };
 } // lib.optionalAttrs (!stdenv.isDarwin) {
   # Test deadlocks on darwin, sandboxing issue?
   dependency-environment = callTest ./dependency-environment { };
diff --git a/tests/subdirectory/default.nix b/tests/subdirectory/default.nix
new file mode 100644
index 000000000..b4869742c
--- /dev/null
+++ b/tests/subdirectory/default.nix
@@ -0,0 +1,14 @@
+{ lib, poetry2nix, postgresql_14, runCommandCC, stdenv }:
+
+let env = poetry2nix.mkPoetryEnv { projectDir = ./.; };
+in if stdenv.isDarwin then
+  env
+else
+  runCommandCC "subdirectory-test"
+  {
+    PSYCOPG_IMPL = "python";
+    LD_LIBRARY_PATH = lib.makeLibraryPath [ postgresql_14 ];
+  } ''
+    '${env}/bin/python' -c 'import psycopg'
+    touch "$out"
+  ''
diff --git a/tests/subdirectory/poetry.lock b/tests/subdirectory/poetry.lock
new file mode 100644
index 000000000..9b74ae213
--- /dev/null
+++ b/tests/subdirectory/poetry.lock
@@ -0,0 +1,58 @@
+# This file is automatically @generated by Poetry and should not be changed by hand.
+
+[[package]]
+name = "psycopg"
+version = "3.1.10"
+description = "PostgreSQL database adapter for Python"
+category = "main"
+optional = false
+python-versions = ">=3.7"
+files = []
+develop = false
+
+[package.dependencies]
+typing-extensions = ">=4.1"
+tzdata = {version = "*", markers = "sys_platform == \"win32\""}
+
+[package.extras]
+binary = ["psycopg-binary (==3.1.10)"]
+c = ["psycopg-c (==3.1.10)"]
+dev = ["black (>=23.1.0)", "dnspython (>=2.1)", "flake8 (>=4.0)", "mypy (>=1.4.1)", "types-setuptools (>=57.4)", "wheel (>=0.37)"]
+docs = ["Sphinx (>=5.0)", "furo (==2022.6.21)", "sphinx-autobuild (>=2021.3.14)", "sphinx-autodoc-typehints (>=1.12)"]
+pool = ["psycopg-pool"]
+test = ["anyio (>=3.6.2)", "mypy (>=1.4.1)", "pproxy (>=2.7)", "pytest (>=6.2.5)", "pytest-cov (>=3.0)", "pytest-randomly (>=3.5)"]
+
+[package.source]
+type = "git"
+url = "https://github.com/psycopg/psycopg.git"
+reference = "3.1.10"
+resolved_reference = "8d2ba2d7587116b65911cdccdf24af0413f17865"
+subdirectory = "psycopg"
+[[package]]
+name = "typing-extensions"
+version = "4.7.1"
+description = "Backported and Experimental Type Hints for Python 3.7+"
+category = "main"
+optional = false
+python-versions = ">=3.7"
+files = [
+    {file = "typing_extensions-4.7.1-py3-none-any.whl", hash = "sha256:440d5dd3af93b060174bf433bccd69b0babc3b15b1a8dca43789fd7f61514b36"},
+    {file = "typing_extensions-4.7.1.tar.gz", hash = "sha256:b75ddc264f0ba5615db7ba217daeb99701ad295353c45f9e95963337ceeeffb2"},
+]
+
+[[package]]
+name = "tzdata"
+version = "2023.3"
+description = "Provider of IANA time zone data"
+category = "main"
+optional = false
+python-versions = ">=2"
+files = [
+    {file = "tzdata-2023.3-py2.py3-none-any.whl", hash = "sha256:7e65763eef3120314099b6939b5546db7adce1e7d6f2e179e3df563c70511eda"},
+    {file = "tzdata-2023.3.tar.gz", hash = "sha256:11ef1e08e54acb0d4f95bdb1be05da659673de4acbd21bf9c69e94cc5e907a3a"},
+]
+
+[metadata]
+lock-version = "2.0"
+python-versions = "^3.10"
+content-hash = "57aea2a6ff62c054b7524aaf8ace8a91628f19986f8076ff0fc42f651c45b595"
diff --git a/tests/subdirectory/pyproject.toml b/tests/subdirectory/pyproject.toml
new file mode 100644
index 000000000..d7a9dc61a
--- /dev/null
+++ b/tests/subdirectory/pyproject.toml
@@ -0,0 +1,13 @@
+[tool.poetry]
+name = "subdirectory-test"
+version = "0.1.0"
+description = ""
+authors = []
+
+[tool.poetry.dependencies]
+python = "^3.10"
+psycopg = {git = "https://github.com/psycopg/psycopg.git", rev = "3.1.10", subdirectory = "psycopg"}
+
+[build-system]
+requires = ["poetry-core"]
+build-backend = "poetry.core.masonry.api"