diff --git a/src/rebar_file_utils.erl b/src/rebar_file_utils.erl
index 8158312b..89c6d931 100644
--- a/src/rebar_file_utils.erl
+++ b/src/rebar_file_utils.erl
@@ -29,6 +29,8 @@
 -export([try_consult/1,
          consult_config/2,
          format_error/1,
+         symlink_or_create/2,
+         symlink/2,
          symlink_or_copy/2,
          rm_rf/1,
          cp_r/2,
@@ -86,6 +88,36 @@ consult_config(State, Filename) ->
 format_error({bad_term_file, AppFile, Reason}) ->
     io_lib:format("Error reading file ~s: ~s", [AppFile, file:format_error(Reason)]).
 
+-spec symlink_or_create(Source, Target) -> Result when
+    Source :: file:filename(),
+    Target :: file:filename(),
+    Result :: Ok | Error,
+    Ok :: ok,
+    Error :: {error, string()}.
+symlink_or_create(Source, Target) ->
+    SourceExists = ec_file:is_dir(Source) orelse ec_file:is_symlink(Source),
+
+    case SourceExists of
+        true  -> force_link(Source, Target);
+        false -> force_shadow_dir(Target)
+    end.
+
+-spec symlink(Source, Target) -> Result when
+    Source :: file:filename(),
+    Target :: file:filename(),
+    Result :: Ok | Error,
+    Ok :: ok,
+    Error :: {error, string()}.
+symlink(Source, Target) ->
+    case os:type() of
+        {win32, _} ->
+            S = unicode:characters_to_list(Source),
+            T = unicode:characters_to_list(Target),
+            win32_symlink(S, T);
+        _          ->
+            file:make_symlink(Source, Target)
+    end.
+
 symlink_or_copy(Source, Target) ->
     Link = case os:type() of
                {win32, _} ->
@@ -119,21 +151,6 @@ symlink_or_copy(Source, Target) ->
             end
     end.
 
-win32_symlink(Source, Target) ->
-    Res = rebar_utils:sh(
-            ?FMT("cmd /c mklink /j \"~s\" \"~s\"",
-                 [rebar_utils:escape_double_quotes(filename:nativename(Target)),
-                  rebar_utils:escape_double_quotes(filename:nativename(Source))]),
-            [{use_stdout, false}, return_on_error]),
-    case win32_ok(Res) of
-        true -> ok;
-        false ->
-            {error, lists:flatten(
-                      io_lib:format("Failed to symlink ~s to ~s~n",
-                                    [Source, Target]))}
-    end.
-
-
 %% @doc Remove files and directories.
 %% Target is a single filename, directoryname or wildcard expression.
 -spec rm_rf(string()) -> 'ok'.
@@ -475,3 +492,39 @@ cp_r_win32(Source,Dest) ->
                           ok = cp_r_win32({filelib:is_dir(Src), Src}, Dst)
                   end, filelib:wildcard(Source)),
     ok.
+
+win32_symlink(Source, Target) ->
+    Res = rebar_utils:sh(
+            ?FMT("cmd /c mklink /j \"~s\" \"~s\"",
+                 [rebar_utils:escape_double_quotes(filename:nativename(Target)),
+                  rebar_utils:escape_double_quotes(filename:nativename(Source))]),
+            [{use_stdout, false}, return_on_error]),
+    case win32_ok(Res) of
+        true -> ok;
+        false ->
+            {error, lists:flatten(
+                      io_lib:format("Failed to symlink ~s to ~s~n",
+                                    [Source, Target]))}
+    end.
+
+force_link(Source, Target) ->
+    %% remove any existing dir
+    ok = case ec_file:is_dir(Target) of
+        true  -> ec_file:remove(Target, [recursive]);
+        false -> ok
+    end,
+    symlink(Source, Target).
+
+force_shadow_dir(Target) ->
+    %% remove any existing symlink
+    ok = case ec_file:is_symlink(Target) of
+        true  -> ec_file:remove(Target);
+        false -> ok
+    end,
+    %% if a directory already exists leave it unaltered, otherwise
+    %% create it
+    case ec_file:is_dir(Target) of
+        true  -> ok;
+        false -> filelib:ensure_dir(filename:join([Target, "dummy"]))
+    end.
+    
diff --git a/test/rebar_file_utils_SUITE.erl b/test/rebar_file_utils_SUITE.erl
index 4cc6a938..f8825d69 100644
--- a/test/rebar_file_utils_SUITE.erl
+++ b/test/rebar_file_utils_SUITE.erl
@@ -23,7 +23,11 @@
          mv_file_diff/1,
          mv_file_dir_same/1,
          mv_file_dir_diff/1,
-         mv_no_clobber/1]).
+         mv_no_clobber/1,
+         symlink_existing_dir/1,
+         create_missing_dir/1,
+         delete_symlink_and_create_dir/1,
+         delete_dir_and_create_symlink/1]).
 
 -include_lib("common_test/include/ct.hrl").
 -include_lib("eunit/include/eunit.hrl").
@@ -38,7 +42,11 @@ all() ->
      canonical_path,
      resolve_link,
      split_dirname,
-     mv_warning_is_ignored].
+     mv_warning_is_ignored,
+     symlink_existing_dir,
+     create_missing_dir,
+     delete_symlink_and_create_dir,
+     delete_dir_and_create_symlink].
 
 groups() ->
     [{tmpdir, [], [raw_tmpdir, empty_tmpdir, simple_tmpdir, multi_tmpdir]},
@@ -329,3 +337,84 @@ mk_base_dir(BasePath, Name) ->
     Path = filename:join(BasePath, atom_to_list(Name) ++ Index),
     ec_file:mkdir_p(Path),
     Path.
+
+
+symlink_existing_dir(Config) ->
+    PrivDir = ?config(priv_dir, Config),
+
+    Source = filename:join([PrivDir, "exists"]),
+    Target = filename:join([PrivDir, "_build", "exists"]),
+    ok = filelib:ensure_dir(filename:join([PrivDir, "_build", "dummy"])),
+
+    ok = filelib:ensure_dir(filename:join([Source, "dummy"])),
+
+    ok = rebar_file_utils:symlink_or_create(Source, Target),
+
+    %% `Target' should be a symlink not a directory, and `Source'
+    %% should exist
+    ?assert(ec_file:is_symlink(Target)),
+    ?assert(ec_file:is_dir(Source)).
+
+create_missing_dir(Config) ->
+    PrivDir = ?config(priv_dir, Config),
+
+    Source = filename:join([PrivDir, "missing"]),
+    Target = filename:join([PrivDir, "_build", "missing"]),
+    ok = filelib:ensure_dir(filename:join([PrivDir, "_build", "dummy"])),
+
+    ok = rebar_file_utils:symlink_or_create(Source, Target),
+
+    %% `Target' should be a directory not a symlink, and `Source'
+    %% should not exist
+    ?assert(ec_file:is_dir(Target)),
+    ?assert(not ec_file:is_symlink(Target)),
+    ?assert(not ec_file:is_dir(Source)).
+
+delete_symlink_and_create_dir(Config) ->
+    PrivDir = ?config(priv_dir, Config),
+
+    Source = filename:join([PrivDir, "gone"]),
+    Target = filename:join([PrivDir, "_build", "gone"]),
+    ok = filelib:ensure_dir(filename:join([PrivDir, "_build", "dummy"])),
+
+    %% create dir temporarily to ensure symlink can be created
+    ok = filelib:ensure_dir(filename:join([Source, "dummy"])),
+
+    ?assert(ec_file:is_dir(Source)),
+
+    ok = rebar_file_utils:symlink(Source, Target),
+
+    %% remove source dir
+    ok = ec_file:remove(Source, [recursive]),
+
+    ?assert(ec_file:is_symlink(Target)),
+    ?assert(not ec_file:is_dir(Source)),
+
+    ok = rebar_file_utils:symlink_or_create(Source, Target),
+
+    %% `Target' should be a directory not a symlink, and `Source'
+    %% should not exist
+    ?assert(not ec_file:is_symlink(Target)),
+    ?assert(ec_file:is_dir(Target)),
+    ?assert(not ec_file:is_dir(Source)).
+
+delete_dir_and_create_symlink(Config) ->
+    PrivDir = ?config(priv_dir, Config),
+
+    Source = filename:join([PrivDir, "created"]),
+    Target = filename:join([PrivDir, "_build", "created"]),
+    ok = filelib:ensure_dir(filename:join([PrivDir, "_build", "dummy"])),
+
+    ok = filelib:ensure_dir(filename:join([Source, "dummy"])),
+    ok = filelib:ensure_dir(filename:join([Target, "dummy"])),
+
+    ?assert(not ec_file:is_symlink(Target)),
+    ?assert(ec_file:is_dir(Target)),
+    ?assert(ec_file:is_dir(Source)),
+
+    ok = rebar_file_utils:symlink_or_create(Source, Target),
+
+    %% `Target' should be a symlink not a directory, and `Source'
+    %% should exist
+    ?assert(ec_file:is_symlink(Target)),
+    ?assert(ec_file:is_dir(Source)).
\ No newline at end of file