diff --git a/src/uu/mktemp/src/mktemp.rs b/src/uu/mktemp/src/mktemp.rs
index dd1f57b8b44..7787af596f5 100644
--- a/src/uu/mktemp/src/mktemp.rs
+++ b/src/uu/mktemp/src/mktemp.rs
@@ -162,12 +162,21 @@ impl Options {
             let template = matches.value_of(OPT_TMPDIR).unwrap().to_string();
             (tmpdir, template)
         } else {
-            let tmpdir = matches.value_of(OPT_TMPDIR).map(String::from);
-            let template = matches
-                .value_of(ARG_TEMPLATE)
-                .unwrap_or(DEFAULT_TEMPLATE)
-                .to_string();
-            (tmpdir, template)
+            // If no template argument is given, `--tmpdir` is implied.
+            match matches.value_of(ARG_TEMPLATE) {
+                None => {
+                    let tmpdir = match matches.value_of(OPT_TMPDIR) {
+                        None => Some(env::temp_dir().display().to_string()),
+                        Some(tmpdir) => Some(tmpdir.to_string()),
+                    };
+                    let template = DEFAULT_TEMPLATE;
+                    (tmpdir, template.to_string())
+                }
+                Some(template) => {
+                    let tmpdir = matches.value_of(OPT_TMPDIR).map(String::from);
+                    (tmpdir, template.to_string())
+                }
+            }
         };
         Self {
             directory: matches.is_present(OPT_DIRECTORY),
diff --git a/tests/by-util/test_mktemp.rs b/tests/by-util/test_mktemp.rs
index 55ca021c105..744e02a92c1 100644
--- a/tests/by-util/test_mktemp.rs
+++ b/tests/by-util/test_mktemp.rs
@@ -4,7 +4,7 @@ use crate::common::util::*;
 
 use uucore::display::Quotable;
 
-use std::path::PathBuf;
+use std::path::{PathBuf, MAIN_SEPARATOR};
 use tempfile::tempdir;
 
 #[cfg(unix)]
@@ -572,3 +572,42 @@ fn test_too_few_xs_suffix_directory() {
 fn test_too_many_arguments() {
     new_ucmd!().args(&["-q", "a", "b"]).fails().code_is(1);
 }
+
+/// Test that files are created relative to `TMPDIR` environment variable.
+#[test]
+fn test_tmpdir_env_var() {
+    // `TMPDIR=. mktemp`
+    let (at, mut ucmd) = at_and_ucmd!();
+    let result = ucmd.env(TMPDIR, ".").succeeds();
+    let filename = result.no_stderr().stdout_str().trim_end();
+    let template = format!(".{}tmp.XXXXXXXXXX", MAIN_SEPARATOR);
+    assert_matches_template!(&template, filename);
+    assert!(at.file_exists(filename));
+
+    // FIXME This is not working because --tmpdir is configured to
+    // require a value.
+    //
+    // // `TMPDIR=. mktemp --tmpdir`
+    // let (at, mut ucmd) = at_and_ucmd!();
+    // let result = ucmd.env(TMPDIR, ".").arg("--tmpdir").succeeds();
+    // let filename = result.no_stderr().stdout_str().trim_end();
+    // let template = format!(".{}tmp.XXXXXXXXXX", MAIN_SEPARATOR);
+    // assert_matches_template!(&template, filename);
+    // assert!(at.file_exists(filename));
+
+    // `TMPDIR=. mktemp --tmpdir XXX`
+    let (at, mut ucmd) = at_and_ucmd!();
+    let result = ucmd.env(TMPDIR, ".").args(&["--tmpdir", "XXX"]).succeeds();
+    let filename = result.no_stderr().stdout_str().trim_end();
+    let template = format!(".{}XXX", MAIN_SEPARATOR);
+    assert_matches_template!(&template, filename);
+    assert!(at.file_exists(filename));
+
+    // `TMPDIR=. mktemp XXX` - in this case `TMPDIR` is ignored.
+    let (at, mut ucmd) = at_and_ucmd!();
+    let result = ucmd.env(TMPDIR, ".").arg("XXX").succeeds();
+    let filename = result.no_stderr().stdout_str().trim_end();
+    let template = "XXX";
+    assert_matches_template!(&template, filename);
+    assert!(at.file_exists(filename));
+}