diff --git a/include/main.h b/include/main.h
index 7fd0713612d..d22826fa965 100644
--- a/include/main.h
+++ b/include/main.h
@@ -7,7 +7,7 @@
 
 #include "windef.h"
 
-extern BOOL MAIN_MainInit( char *argv[] );
+extern BOOL MAIN_MainInit(void);
 extern void MAIN_WineInit(void);
 extern int MAIN_GetLanguageID(char*lang, char*country, char*charset, char*dialect);
 extern void MAIN_ParseDebugOptions(const char *options);
diff --git a/include/options.h b/include/options.h
index 5df01054e32..550028681ec 100644
--- a/include/options.h
+++ b/include/options.h
@@ -21,6 +21,7 @@ struct options
 
 extern struct options Options;
 extern const char *argv0;
+extern const char *full_argv0;
 
 extern void OPTIONS_Usage(void) WINE_NORETURN;
 extern void OPTIONS_ParseOptions( char *argv[] );
diff --git a/include/process.h b/include/process.h
index b98cf9f7f55..37d182a1a73 100644
--- a/include/process.h
+++ b/include/process.h
@@ -147,7 +147,6 @@ extern DWORD WINAPI MapProcessHandle( HANDLE handle );
 extern BOOL ENV_BuildEnvironment(void);
 
 /* scheduler/process.c */
-extern BOOL PROCESS_Init(void);
 extern void PROCESS_InitWine( int argc, char *argv[] ) WINE_NORETURN;
 extern void PROCESS_InitWinelib( int argc, char *argv[] ) WINE_NORETURN;
 extern PDB *PROCESS_IdToPDB( DWORD id );
diff --git a/loader/dos/module.c b/loader/dos/module.c
index 8acf083a707..aa20c4ca6c5 100644
--- a/loader/dos/module.c
+++ b/loader/dos/module.c
@@ -432,7 +432,7 @@ BOOL MZ_InitTask( LPDOSTASK lpDosTask )
   /* now load dosmod */
   /* check argv[0]-derived paths first, since the newest dosmod is most likely there
    * (at least it was once for Andreas Mohr, so I decided to make it easier for him) */
-  fpath=strrchr(strcpy(path,argv0),'/');
+  fpath=strrchr(strcpy(path,full_argv0),'/');
   if (fpath) {
    strcpy(fpath,"/dosmod");
    execl(path,fname,farg,NULL);
diff --git a/loader/main.c b/loader/main.c
index ea1a70769f6..44cb3d20c76 100644
--- a/loader/main.c
+++ b/loader/main.c
@@ -27,16 +27,8 @@ DEFAULT_DEBUG_CHANNEL(server);
 /***********************************************************************
  *           Main initialisation routine
  */
-BOOL MAIN_MainInit( char *argv[] )
+BOOL MAIN_MainInit(void)
 {
-    /* store the program name */
-    argv0 = argv[0];
-
-    /* Create the initial process */
-    if (!PROCESS_Init()) return FALSE;
-
-    /* Parse command line arguments */
-    OPTIONS_ParseOptions( argv );
     MAIN_WineInit();
 
     /* Load the configuration file */
diff --git a/misc/options.c b/misc/options.c
index d2607349803..9c1b576759b 100644
--- a/misc/options.c
+++ b/misc/options.c
@@ -40,7 +40,8 @@ struct options Options =
     NULL            /* Alternate config file name */
 };
 
-const char *argv0;
+const char *argv0;       /* the original argv[0] */
+const char *full_argv0;  /* the full path of argv[0] (if known) */
 
 static char *inherit_str;  /* options to pass to child processes */
 
diff --git a/scheduler/client.c b/scheduler/client.c
index dbe1af37450..5888975d591 100644
--- a/scheduler/client.c
+++ b/scheduler/client.c
@@ -459,6 +459,20 @@ int CLIENT_InitServer(void)
         break;
     }
 
+    /* if argv[0] is a relative path, make it absolute */
+    full_argv0 = argv0;
+    if (oldcwd && argv0[0] != '/' && strchr( argv0, '/' ))
+    {
+        char *new_argv0 = malloc( strlen(oldcwd) + strlen(argv0) + 2 );
+        if (new_argv0)
+        {
+            strcpy( new_argv0, oldcwd );
+            strcat( new_argv0, "/" );
+            strcat( new_argv0, argv0 );
+            full_argv0 = new_argv0;
+        }
+    }
+
     /* get the server directory name */
     if (gethostname( hostname, sizeof(hostname) ) == -1) fatal_perror( "gethostname" );
     configdir = get_config_dir();
diff --git a/scheduler/process.c b/scheduler/process.c
index 8aea56c144f..656e81d88b1 100644
--- a/scheduler/process.c
+++ b/scheduler/process.c
@@ -171,13 +171,18 @@ void PROCESS_CallUserSignalProc( UINT uCode, HMODULE hModule )
 
 
 /***********************************************************************
- *           PROCESS_Init
+ *           process_init
+ *
+ * Main process initialisation code
  */
-BOOL PROCESS_Init(void)
+static BOOL process_init( char *argv[] )
 {
     struct init_process_request *req;
     PDB *pdb = PROCESS_Current();
 
+    /* store the program name */
+    argv0 = argv[0];
+
     /* Fill the initial process structure */
     pdb->exit_code              = STILL_ACTIVE;
     pdb->threads                = 1;
@@ -227,7 +232,10 @@ BOOL PROCESS_Init(void)
     /* Initialize syslevel handling */
     SYSLEVEL_Init();
 
-    return TRUE;
+    /* Parse command line arguments */
+    OPTIONS_ParseOptions( argv );
+
+    return MAIN_MainInit();
 }
 
 
@@ -396,8 +404,8 @@ static void PROCESS_Start( HMODULE main_module, LPSTR filename )
     {
         /* if no explicit filename, use argv[0] */
         if (!(filename = malloc( MAX_PATH ))) ExitProcess(1);
-        if (!GetFullPathNameA( argv0, MAX_PATH, filename, NULL ))
-            lstrcpynA( filename, argv0, MAX_PATH );
+        if (!GetLongPathNameA( full_argv0, filename, MAX_PATH ))
+            lstrcpynA( filename, full_argv0, MAX_PATH );
     }
 
     /* load main module */
@@ -432,7 +440,7 @@ void PROCESS_InitWine( int argc, char *argv[] )
     DWORD type;
 
     /* Initialize everything */
-    if (!MAIN_MainInit( argv )) exit(1);
+    if (!process_init( argv )) exit(1);
 
     main_exe_argv = ++argv;  /* remove argv[0] (wine itself) */
 
@@ -519,7 +527,7 @@ void PROCESS_InitWinelib( int argc, char *argv[] )
 {
     HMODULE main_module;
 
-    if (!MAIN_MainInit( argv )) exit(1);
+    if (!process_init( argv )) exit(1);
 
     /* create 32-bit module for main exe */
     if (!(main_module = BUILTIN32_LoadExeModule())) ExitProcess( GetLastError() );
@@ -636,11 +644,11 @@ static void exec_wine_binary( char **argv, char **envp )
     execve( argv[0], argv, envp );
 
     /* now try the path of argv0 of the current binary */
-    if (!(argv[0] = malloc( strlen(argv0) + 6 ))) return;
-    if ((ptr = strrchr( argv0, '/' )))
+    if (!(argv[0] = malloc( strlen(full_argv0) + 6 ))) return;
+    if ((ptr = strrchr( full_argv0, '/' )))
     {
-        memcpy( argv[0], argv0, ptr - argv0 );
-        strcpy( argv[0] + (ptr - argv0), "/wine" );
+        memcpy( argv[0], full_argv0, ptr - full_argv0 );
+        strcpy( argv[0] + (ptr - full_argv0), "/wine" );
         execve( argv[0], argv, envp );
     }
     free( argv[0] );
@@ -781,7 +789,7 @@ BOOL PROCESS_Create( HFILE hFile, LPCSTR filename, LPSTR cmd_line, LPCSTR env,
     }
     else  /* new wine process */
     {
-        if (!GetFullPathNameA( filename, server_remaining(req->filename), req->filename, NULL ))
+        if (!GetLongPathNameA( filename, req->filename, server_remaining(req->filename) ))
             lstrcpynA( req->filename, filename, server_remaining(req->filename) );
     }
     if (server_call( REQ_NEW_PROCESS )) return FALSE;