Index: Lib/distutils/core.py
===================================================================
--- Lib/distutils/core.py	(revision 62148)
+++ Lib/distutils/core.py	(working copy)
@@ -210,6 +210,7 @@
     _setup_stop_after = stop_after
 
     save_argv = sys.argv
+    save_dir = os.getcwd()
     g = {'__file__': script_name}
     l = {}
     try:
@@ -219,6 +220,7 @@
                 sys.argv[1:] = script_args
             execfile(script_name, g, l)
         finally:
+            os.chdir(save_dir)
             sys.argv = save_argv
             _setup_stop_after = None
     except SystemExit:
Index: Lib/distutils/tests/test_core.py
===================================================================
--- Lib/distutils/tests/test_core.py	(revision 62148)
+++ Lib/distutils/tests/test_core.py	(working copy)
@@ -27,7 +27,16 @@
 setup()
 """
 
+setup_changing_cwd = """\
+from distutils.core import setup
+import os
 
+os.chdir(os.pardir)  # Not so great; assumes we're not at the top dir.
+
+setup()
+"""
+
+
 class CoreTestCase(unittest.TestCase):
 
     def setUp(self):
@@ -73,7 +82,14 @@
             output = output[:-1]
         self.assertEqual(cwd, output)
 
+    def test_run_setup_saves_and_restores_cwd(self):
+        starting_dir = os.getcwd()
+        distutils.core.run_setup(
+            self.write_setup(setup_changing_cwd))
+        ending_dir = os.getcwd()
+        self.assertEqual(starting_dir, ending_dir)
 
+
 def test_suite():
     return unittest.makeSuite(CoreTestCase)