diff --git a/runtime/doc/todo.txt b/runtime/doc/todo.txt
--- a/runtime/doc/todo.txt
+++ b/runtime/doc/todo.txt
@@ -156,8 +156,6 @@
 
 Patch to make more characters work in dialogs. (Yankwei Jia, 2010 Aug 4)
 
-":drop" does not respect 'autochdir'. (Peter Odding, 2010 Jul 24)
-
 When 'lines' is 25 and 'scrolloff' is 12, "j" scrolls zero or two lines
 instead of one. (Constantin Pan, 2010 Sep 10)
 
diff --git a/src/main.c b/src/main.c
--- a/src/main.c
+++ b/src/main.c
@@ -3828,6 +3828,8 @@
 		    '\\', TRUE)) == NULL)
 	return NULL;
     ga_init2(&ga, 1, 100);
+    /* Temporarily switch directories to the current path to handle relative
+     * file names */
     ga_concat(&ga, (char_u *)"<C-\\><C-N>:cd ");
     ga_concat(&ga, p);
     vim_free(p);
@@ -3861,5 +3863,9 @@
     /* The :drop commands goes to Insert mode when 'insertmode' is set, use
      * CTRL-\ CTRL-N again. */
     ga_concat(&ga, (char_u *)"|if exists('*inputrestore')|call inputrestore()|endif<CR>");
-    ga_concat(&ga, (char_u *)"<C-\\><C-N>:cd -");
+    ga_concat(&ga, (char_u *)"<C-\\><C-N>");
+    /* Switch back to the correct current directory (prior to temporary path
+     * switch) unless autochdir is set, in which case it will already be
+     * correct after the :drop command. */
+    ga_concat(&ga, (char_u *)":if !exists('+acd')||!&acd|cd -|endif<CR>");
     if (sendReply)
@@ -3865,6 +3871,6 @@
     if (sendReply)
-	ga_concat(&ga, (char_u *)"<CR>:call SetupRemoteReplies()");
-    ga_concat(&ga, (char_u *)"<CR>:");
+	ga_concat(&ga, (char_u *)":call SetupRemoteReplies()");
+    ga_concat(&ga, (char_u *)":");
     if (inicmd != NULL)
     {
 	/* Can't use <CR> after "inicmd", because an "startinsert" would cause